Log in
Login
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

World Bank Forecasts Malaysia Economic Growth +5.1% in 2013, 2014

share with twitter share with LinkedIn share with facebook
share via e-mail
0
06/24/2013 | 03:45pm CEST
   By Abhrajit Gangopadhyay 
 

KUALA LUMPUR--The World Bank Monday forecast Malaysia's economy to grow 5.1% annually through 2014, powered by strong investments and consumption.

The expansion pace is a deceleration from last year's 5.6% following weak external conditions.

"While domestic demand will decelerate in 2013 from the buoyant levels of 2012, it will remain Malaysia's main source of growth," the World Bank said in its Malaysia Economic Monitor report.

The multilateral agency expects this year's growth to be supported by strong momentum in investments, accommodative fiscal and monetary policies and higher household income amid low unemployment level.

A pick-up in exports in 2014 will offset slowing domestic demand, which may set in with tighter fiscal and monetary policies next year, the report said.

Malaysia has often been criticized for its practice of spending billions of dollars to shield consumers from global price shocks by subsidizing fuel and food. It also offers cash handouts to low-income groups and hasn't yet introduced a consumption-based tax to broaden the tax base and raise government revenue.

While the government's steps have been growth-supportive, the central bank has kept the policy interest rate steady at 3.0% for past 12 successive monetary reviews.

Analysts have been calling for Southeast Asia's third largest economy to retool its subsidy system and introduce Goods and Services Tax among others to boost fiscal discipline and help cut its gaping budget deficit, which has refused to go since the Asian Financial Crisis battered the economy in the late 1990s.

The government spends over MYR2 billion a month on fuel subsidies alone. Many economists consider the subsidies wasteful, as beneficiaries include middle-to high-income consumers who could afford costlier cooking fuel and gasoline.

The World Bank expects the government to initiate subsidy reforms and start taking gradual steps to implement goods and services tax from the next year.

"The sustainability of Malaysia's favorable near-term outlook into 2015 and beyond hinges on the implementation of structural reforms," the World Bank said.

Apart from fuel subsidy reforms, Malaysia needs to cut its reliance on commodities revenue to become a high-income economy by 2020, it added.

"There is a modest risk that Malaysia's current account position could turn to a deficit in the event of a sharp decline in commodity prices," it said.

According to latest data, Malaysia's April trade surplus, a key component of current account surplus, was hammered to the smallest in more than 15 years as exports contracted for three consecutive months, dragged down by lower prices of palm oil and crude oil.

Write to Abhrajit Gangopadhyay at abhrajit.gangopadhyay@dowjones.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
React to this article
Latest news
Date Title
06:18pDJU.S. Grains, Soybeans Slide as Dollar Lifts
06:17p QT VASCULAR : Submits IDE Requesting Permission to Begin Pivotal Trial of Its Drug-Coated Chocolate Balloon in The United States
06:17p J SAINSBURY : Sainsbury's stores go green by turning food waste into energy
06:17p FUELCELL ENERGY : Exxon and FuelCell to study capturing carbon emissions
06:17p GENERAL ELECTRIC : Barnes-Jewish Hospital Installs the Industry's First General Purpose Digital SPECT/CT
06:17p PETE OLSON : Cutting off ISIS' energy supply
06:17p UNIPIXEL : Wins Programs with New Japanese PC OEM Customer
06:17p DEPARTMENT OF CITIZENSHIP AND IMMIGRATION OF CANAD : Start-up visa continues to grow
06:17p AK ALROSA PAO : ALROSA Vice President Rinat Gizatulin elected as head of subcommittee at Russia’s Chamber of Commerce and Industry
06:17p CHURCHILL CHINA : Issue of Equity, Transfer out of Treasury and Director Dealings - 05/05/2016
Latest news
Advertisement
Hot News 
QGC SUBMISSION : Senate Select Committee on Unconventional Gas Mining
BANGO : Implements Google Play Direct Carrier Billing In India
FALANX GROUP LIMITED : Acquisition, Placing and issue of Loan Notes
FILTRONIC : New Contract Win
EMPRESARIA : Makes Good Start To 2016 With Net Fee Income Higher
Most Read News
05/04DJAustralia March Trade Deficit Narrows
05/04DJAustralian March Retail Sales Rise
05/04 KANTAR HEALTH : Names Diana Tan General Manager for China, Expanding Expertise in Innovative Patient Insights
05/04 PRODUCER PRICE SURVEY : March 2016
12:10a AUSTRADE AUSTRALIAN TRADE COMMISSION : Outcomes from LNG 18
Most recommended articles
05/03DJUBS Shares Drop As Profit Slumps
12:16p FTSE steadies near one-month low; Centrica slumps
12:14p OIL RIVALS COOPERATE TO SLASH EQUIPMENT COSTS : Shell
12:14pDJFannie Mae to Pay $919 Million Dividend to U.S. as Profit Falls--Update
12:14pDJEUROPE MARKETS : European Stocks Break Four-day Losing Run As Oil Prices Rally