Brief Notes

MALAYSIAN ECONOMIC SCENARIO

1H2012
The Malaysian Economic Scenario Malaysia has strong fiscal fundamentals with abundance of natural resources i.e. agricultural, palm oil, rubber, forestry, minerals, oil and gas. In addition, Malaysia has the most well developed infrastructures among the newly industrialising countries of Asia. These characteristics provide a strong foundation for exports business. The Malaysian economy has been and remains over-reliant on government stimuli. As the government pushes away from this over-reliance, growths in private sector investments are paramount in order to sustain economic growth along with growth in domestic demand and consumption. Thus, the government is focused on economic transformation and has showed consistent resolve in driving forward reforms that facilitate the development of a high- tech, high-income, knowledge-based economy. Current Challenges The Malaysian economy was largely affected by the on-going European economic crisis; coupled with slow recovery of the United States economy and slowdown of economic activities in China and India. The European economic crisis is a concern globally since its represent a larger economic bloc than the United States or China. The crisis has been three years in the making, and its outcome is still uncertain. The whole euro area is now in recession. The crisis is fuelled by member countries debt and distressed banking systems. Therefore, Malaysia as trade dependent country, via commodity and manufacturing exports to these countries, is facing serious external economic challenges. As results both industrial production and trade performances have turned volatile in 1H2012. However, the above decline performances are expected to be balanced by domestic economic demand. In fact, domestic demand is planned to be the main economic growth driver given the negative external developments, with private and government consumption continuing as key economic growth drivers. As such the projected economic performance will be moderate as internal trade being stimulated and picking-up. The rollout of major Economic Transformation Plan (ETP) projects and the resulting increase in gross fixed capital formation will hopefully take up some of the slack as well. ETP was launched in 2010 is a USD58 billion (RM183 billion) programme that was introduced for the development of higher value-added industries and infrastructure in partnership with private investors. The program will proceed all the way to 2020. The USD11.5 billion mass rapid transit rail system in Kuala Lumpur, the redevelopment of the Sungai Besi military airbase and Greater KL for residential and commercial purposes are part of the ETP programs.

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Brief Notes

MALAYSIAN ECONOMIC SCENARIO Malaysian Institute of Economic Research (MIER) forecasted that all the major economic sectors in Malaysia are projected to register growth in 2012, albeit at a slower pace. Furthermore, the IMF now estimates the risk of a serious global slowdown to have fallen from 10% in 3Q2011 to about 1% in 1Q2012. This indicates better global economic positioning in the near future. Economic Outlook The World Economic Outlook released by the International Monetary Fund (IMF) in April 2012 projected a 5.4 per cent regional growth for 2012 and 6.2 per cent growth for 2013, a marginal drop from its previous projection.
Real GDP
Projections 2011 2012 2013 2011

Consumer Prices
Projections 2012 2013

Current Account Balance

Projections 2011 2012 2013

Unemployment
Projections 2011 2012 2013

ASEAN-5 Indonesia Thailand Malaysia Philippines Vietnam Singapore

4.5 6.5 0.1 5.1 3.7 5.9 4.9

5.4 6.1 5.5 4.4 4.2 5.6 2.7 1.4 2.6

6.2 6.6 7.5 4.7 4.7 6.3 3.9 2.0 2.8

5.9 5.4 3.8 3.2 4.8 18.7 5.2 2.7 1.6

5.4 6.2 3.9 2.7 3.4 12.6 3.5 1.9 1.4

4.7 6.0 3.3 2.5 4.1 6.8 2.3 1.7 1.4

2.8 0.2 3.4 11.5 2.7 0.5 21.9 0.2 2.2

1.7 0.4 1.0 10.8 0.9 1.6 21.8 0.4 1.8

1.4 0.9 1.4 10.4 1.0 1.4 21.3 0.2 2.0

- 6.6 0.7 3.2 7.0 4.5 2.0 7.9 4.3

- 6.4 0.7 3.1 7.0 4.5 2.1 7.9 4.3

- 6.3 0.7 3.0 7.0 4.5 2.1 7.8 4.2

Advanced Economies 1.6 Advanced Asia 1.3

Source: World Economic Outlook, International Monetary Fund

Malaysia growth forecast has been upgraded by the IMF to 4.4% for 2012 and 4.7% for 2013 from forecast cut to 4.0% in January 2012 with unemployment remains below the full employment level. While the Asian Development Bank (ADB), projected that the Malaysia growth is moderating to about 4% in 2012, then quickening to 5% in 2013 as the external environment improves and domestic demand will start to play its role to anchor growth in the region. Key Takeaway The key words are stimulation of domestic demand and improvement of external environment. Thus, any new proposed business activities in the country must be positioned to benefit from stimulation of domestic economy especially for new technology that related to the Governments Economic Transformation Plan (ETP) program. Current slowdown period in the US, Europe, China and India should be used to develop positioning of niche product in these markets with assistance from MATRADE. On the other hand, cost competitive products produced from new or competitive technologies must start to make their in-road now.

MYDATA RESEARCH CONSULTING SDN BHD

OPERATION ADDRESS:

CONTACT DETAILS

43650 Bandar Baru Bangi, Selangor, MALAYSIA

Fax: +60389267231 Email: info@mydata.com.my