ON the eve of the New Year, it is of course natural to look ahead with hope and expectation of better times. However, the reality is that Malaysia’s economy is one of the most open and export dependent nations in the world.
This being the case, the nation’s economic performance shall be very much dependent on global economic environments and foreign market conditions.
In presenting its Economic Outlook, the Organisation for Economic Cooperation and Development (OECD) has warned that the global economy is expected to make “a hesitant and uneven recovery” over the coming two years.
“The near-term outlook is not only weak, but also downside risks predominate. The lingering euro-area crisis remains a serious threat to the world economy. At the same time, if left unresolved, the US fiscal cliff’ could tip the US economy into recession and weigh on global growth,” he added.
With the United States and Europe battling to revive their economies, the OECD believes the world economy will grow by 3.4 per cent in 2013, up from 2.9 per cent this year.
This will likely be supported by the economic expansion of the likes of China, Brazil and India, although they too will be impacted by challenges faced in the West.
Datuk Pang Teck Wai, a research fellow of the Malaysian Institute of Economic Research (Mier), had previously pointed out in an interview that since Malaysia is an export dependent nation, it means that if the world economy is doing well, the Malaysian economic growth should be strong as well.
Pang (left), who is also the chief executive officer (CEO) of POIC Sabah Sdn Bhd, says the domestic market just can’t take up what has been produced by the manufacturing and agriculture sectors.
“Hence, the bulk of what has been produced is for export,” he explains.
This being the case, Malaysia’s economic outlook is closely and directly linked with world economic trends.
As for Sabah, Chief Minister Datuk Seri Musa Aman (right) has projected the state’s economy to grow between 5 to 6 percent in 2013.
Musa, who is also Finance Minister, says that based on projection, the state’s future economic scenario has a good and bright prospect.
“A few high impact Public Private Partnership funded projects are expected to play important catalysts in generating the State’s economic growth,” he said in presenting the State Budget at the State Legislative Assembly in Kota Kinabalu on Oct 19.
He believes that the high impact projects in the pipeline covering many sectors including the oil and gas sector, plus the many initiatives as announced in the Federal Budget 2013, like the Economic Transformation Programme (ETP), would further boost the state’s economy.
“While growth from the external sector is anticipated to moderate amid global economic challenges, the state’s economy is envisaged to remain stable,” he added.
World Bank forecast
According to the World Bank, Malaysia’s economy has been resilient amid the challenging global economic conditions, with real gross domestic (GDP) product growth estimated at 5.1 per cent in 2012 and 5 per cent in 2013.
The financial experts are cautiously confident about Malaysia maintaining its economic performance in 2013. The recent Malaysia Economic Monitor, a report by the World Bank, said Malaysia’s growth would likely weather a weak global environment and would grow robustly in 2013.
Public and private investments are expected to remain strong and lend support to economic growth in the New Year.
Private investment is forecast to grow at 13.3 per cent in 2013, up from 11.7 per cent in 2012, driven by the rollout of the ETP.
Driven by domestic demand
Commenting on Malaysia’s third-quarter performance, Alliance Research chief economist Manokaran Mottain (left) said the economy was still driven by domestic demand, led by private consumption and investment activities.
However, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz (right) cautioned that although GDP growth in the fourth quarter was likely to continue that of the third quarter, there were some uncertainties in the export sector.
The central bank estimates that growth for the whole of 2012 will be at least 5 per cent.
A Happy New Year &
May 2013 be
A Year of Peace,