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 | 10:45am 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

Latest news
Date Title
<1m ago ESIO WATER & BEVERAGE DEVELOPMENT CORP. : Announced Execution of Letter of Intent to Acquire iMetabolic, Inc.
1m ago Gilat Deploys 3G Small Cell Network for TIM Brasil in Only Two Months
1m ago HOTEL SPAS : Doing Well by Doing Good
2m ago INTERDIGITAL : posts 3Q profit
2m ago ARGEX TITANE : Titanium Convertible Debenture to Begin Trading on Toronto Stock Exchange as RGX.DB
2m agoDJU.S. Jobless Claims Rise By 3,000
2m ago CAMPBELL SOUP : Packaged Foods and Meats Equities Technical Analysis - General Mills, ConAgra Foods, Kellogg, Keurig Green Mountain, and Campbell Soup
2m ago MONSANTO : New Services, Upcoming Earnings Releases, Quarterly Results, Oil Discovery, and Recognitions - Research Reports on Schlumberger, ExxonMobil, Halliburton, Chevron and Monsanto
2m ago GUIDEWIRE SOFTWARE : Westfield Insurance Deploys Guidewire System for Claims Management
2m agoDJU.S. GDP Expands at 3.5% Rate
Latest news
Advertisement
Hot News 
CLIPPER LOGISTICS : Up On Contract With German Fashion Retailer s.Oliver
PHOENIX IT : Advice Direct Scotland takes IT into the cloud to improve customer services
AXWAY SOFTWARE : Revenue of €59.4 million for the 3rd quarter, more or less stable compared with 2013 ...
SOFTWARE : to showcase service delivery solutions at 2014 GovTech
RIBER : Stronger level of orders recorded
Most Read News
1d ago MEDASSETS : tops Street 3Q forecasts
1d ago GENERAL MOTORS' : Trademark Application for "GOODWRENCH" Filed
1d ago SAMSUNG ELECTRONICS : sees higher handset average sale price in fourth-quarter
4h ago Volkswagen profit jumps on record Audi, Porsche sales
36m ago Lufthansa shares drop after 2015 profit guidance cut for second time
Most recommended articles
2m agoDJU.S. Jobless Claims Rise By 3,000
2m agoDJU.S. GDP Expands at 3.5% Rate
2m ago Bombardier third-quarter profit tops estimates as plane deliveries jump
3m agoDJCanada Weekly Earnings Up 3.5% in August from Year Ago
4m ago Futures point to lower open despite strong GDP report
Dynamic quotes  
ON
| OFF