Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

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

06/24/2013 | 09:45am US/Eastern
   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

React to this article
Latest news
Date Title
03:05p NATIONAL PORK PRODUCERS COUNCIL : Ag, Food Groups Urge Quick Passage Of TPA
03:04p DOW MOVERS : Pg, jpm
03:03p BP : ends attempt to oust oil spill claims administrator
03:03p CE WEEK : & getgeeked Launch Tech Influencer Program in New York in June
03:02p Stanley Steemer Turns to Enterprise Mobility to Streamline Processes, Increase Customer Value, and Fuel Growth
03:01p DEUTSCHE TELEKOM : plans to take on fewer trainees
03:01p BROADCOM : Witness Large Inflow of Money
03:01p JOINUIN : Baroness Grey-Thompson appointed Join In non-executive director
03:01p DOHA BANK Q S C : Qatars Doha Bank gets shareholder assent for Tier 1, bond plans
03:01p MASTERCARD : Egyptian govt, Mastercard, others racing for financial inclusion
Latest news
Advertisement
Hot News 
BELLZONE MINING : Financing Update and Restoration of Trading
SNOOZEBOX : Confirms Ealing Council Project With Mears Group
CHURCHILL MINING : Board Change
THOMAS COOK : Cook and Fosun Strategic Partnership
MTY NV : ASML Receives Intel's Preferred Quality Supplier Award
Most Read News
03/05DJVOLKSWAGEN : to Announce Mexico Expansion Worth About $1 Billion -Reuters
03/05 WAREHOUSE : Summer shoppers go online with The Warehouse - growing sales 30%
03/05 BEACH ENERGY : Redemption of Convertible Notes
03/05DJE I DU PONT DE NEMOURS : DuPont : Plant Outage to Hurt Safety and Protection Unit in First Quarter
01:21a QUINDELL : in £7.1m sale of stake in accident repair firm Nationwide
Most recommended articles
03:00p France to commit 8 billion euros to Juncker investment plan
02:54p Hitachi to pay 9.5 euros per Ansaldo share after div adjustment
02:50pDJFiera-Axium Led Group Acquires Montreal Gateway Terminals
02:50pDJMARKET SNAPSHOT : Dow Sees Triple-digit Losses As Strong Jobs Report Hints At Rate Hike
02:47p Oil and gas sector tarnishes strong U.S. jobs report
Dynamic quotes  
ON
| OFF