KUALA LUMPUR (April 11): Given Malaysia’s close integration with the world economy — exports and imports of goods and services are equivalent to over 100% of gross domestic product (GDP) — weakness in the global outlook clouds the country’s prospects in 2012, said the Asian Development Bank (ADB) in its Asian Development Outlook 2012: Confronting Rising Inequality in Asia report.
“Growth is seen moderating to about 4.0% in 2012, then quickening to 5.0% in 2013 as the external environment improves,” ADB said in the report released on Wednesday.
The annual Asian Development Outlook provides a comprehensive analysis of economic performance for the past year and offers forecasts for the next two years for the 45 economies in Asia and the Pacific that make up developing Asia.
The ADB said that despite weak global demand, Asian Development Outlook 2012 expects that developing Asia will largely maintain its growth momentum in the next couple of years, in an environment of easing inflation for most regional economies, although policy makers must be alert to further oil-price spikes arising from threats of oil supply disruptions.
On Malaysia, the ADB said strong private consumption drove economic growth in 2011, supported by government spending and, less so, fixed investment.
“The weaker global environment is forecast to slow growth in this highly open economy in 2012, but the better global backdrop next year should help lift its performance.
“Moderating growth this year suggests that inflation will also ease. The external current account surplus will remain buoyant,” it said.
The report said domestic demand would again anchor growth in Malaysia.
“Private consumption will get support from government decisions in the 2012 budget to raise wages for the public sector and to make a one-time cash payment to low and middle-income groups (53% of all households).
“Government plans to introduce a minimum wage in 2012 are expected to lift incomes for the low paid,” it said.
Still, the labour market is likely to soften in 2012, particularly in trade-exposed industries. Job vacancies in January 2012 declined steeply from the prior-year period, it said, adding that consumer sentiment weakened late in 2011.
“Private investment in export-oriented industries such as electrical and electronics products will be subdued by the weak global outlook this year, although investment will likely be relatively buoyant in industries that depend on domestic demand,” said the ADB.
“Growth is seen moderating to about 4.0% in 2012, then quickening to 5.0% in 2013 as the external environment improves,” ADB said in the report released on Wednesday.
The annual Asian Development Outlook provides a comprehensive analysis of economic performance for the past year and offers forecasts for the next two years for the 45 economies in Asia and the Pacific that make up developing Asia.
The ADB said that despite weak global demand, Asian Development Outlook 2012 expects that developing Asia will largely maintain its growth momentum in the next couple of years, in an environment of easing inflation for most regional economies, although policy makers must be alert to further oil-price spikes arising from threats of oil supply disruptions.
On Malaysia, the ADB said strong private consumption drove economic growth in 2011, supported by government spending and, less so, fixed investment.
“The weaker global environment is forecast to slow growth in this highly open economy in 2012, but the better global backdrop next year should help lift its performance.
“Moderating growth this year suggests that inflation will also ease. The external current account surplus will remain buoyant,” it said.
The report said domestic demand would again anchor growth in Malaysia.
“Private consumption will get support from government decisions in the 2012 budget to raise wages for the public sector and to make a one-time cash payment to low and middle-income groups (53% of all households).
“Government plans to introduce a minimum wage in 2012 are expected to lift incomes for the low paid,” it said.
Still, the labour market is likely to soften in 2012, particularly in trade-exposed industries. Job vacancies in January 2012 declined steeply from the prior-year period, it said, adding that consumer sentiment weakened late in 2011.
“Private investment in export-oriented industries such as electrical and electronics products will be subdued by the weak global outlook this year, although investment will likely be relatively buoyant in industries that depend on domestic demand,” said the ADB.
