There is growing optimism among investors despite possibility of overall contraction
Multi-sector economy:
Malaysia’s economic performance has been strong, and it is often
recognised as among the emerging economies that will have a prominent
role on the world stage in the coming years.
KUALA LUMPUR: The new year is just around the corner. In many ways, it will be
a relief to say farewell to 2012, a year which has seen the advanced
countries struggling amid seemingly unending economic and financial
uncertainty.
Naturally, the tail-end of the year is a time to
look ahead with hope and expectation. And indeed, there is growing
optimism among investors about the global economy. However, is this
realistic when some experts refuse to rule out the possibility of an
overall contraction?
When presenting its Economic Outlook in
late November, the Organisation for Economic Cooperation and
Development (OECD) warned that the global economy was expected to make
“a hesitant and uneven recovery” over the coming two years.
OECD secretary-general Angel Gurra
pointed out that we were not yet out of the woods. “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.
The eurozone is expected to see a 0.4% contraction this
year and a further 0.1% fall in 2013. Even if the White House and
congressional leaders can hammer out a short-term agreement on the
budget that will avoid the fiscal cliff, growth in the United States is
forecast to grow at 2% next year, down from the 2.6% forecasted in May.
With
the United States and Europe battling to revive their economies, the
OECD believes the world economy will grow by 3.4% in 2013, up from 2.9%
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.
Malaysia
too will contribute to this forward momentum. Its economic performance
has been strong, and it is often recognised as among the emerging
economies that will have a prominent role on the world stage in the
coming years.
The recent Country Brand Index (CBI) 2012-13, for
example, ranks Malaysia as third among the Future 15 tomorrow's leading
country brands that have “great potential across a variety of areas”.
Constructed
annually by global brand consultancy FutureBrand, the CBI measures and
ranks global perceptions around the world's nations based on elements
such as their cultures, industries, economic vitality and public policy
initiatives.
Economic reforms
This year is the
first time that the index report incorporate the Future 15, which
reflects six future drivers: governance, investment, human capital,
growth, sustainability and influence.
Published last October, the CBI 2012-13 report notes: “Malaysia's workforce, tourism and vast resources may just be the secret to its success.”
That,
of course, is not the full picture. A key component of the Malaysian
success story has been the sound implementation of economic reforms
since the nation's independence that has transformed an exporter of raw
materials into an emerging, multi-sector economy driven by exports and
supported by a well-developed regulatory system.
Forward-looking
planning has enabled the Government to capitalise on the country's
unique offering, including a rich heritage and scenic landscapes, to
support a thriving tourism sector. Home to more than 15% of the world's
species, Malaysia is one of the world's most bio-diverse areas.
The current emphasis is on climbing the the economic ladder, and this is done via Government-led initiatives such as the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP), and a conscious effort to slowly liberalise sub-sectors of our economy.
Also
crucial are a focus on building on the country's vast natural
resources, a commitment to economic openness, and a concerted effort to
drive investments in infrastructure and research and development. These
are complemented by the encouragement of innovation in business and
amongst the workforce, and the development of regional alliances.
Malaysia's
economy has been resilient amid the challenging global economic
conditions, with real gross domestic (GDP) product growth estimated at
5.1% this year and 5% in 2013, according to the World Bank.
Its
third-quarter performance surprised on the upside with GDP expansion
beating economists' median expectations of 4.8%; year-on-year growth in
the quarter was 5.2%, with domestic demand fuelling economic activity
and compensating for the slower export demand from major trading
partners affected by the ongoing economic woes.
Domestic demand
in the third quarter continued to experience double-digit growth,
increasing 11.4% from a year ago. The impetus for this was supplied by
strong public and private sector investment.
Private investments
were primarily driven by capital spending in the services sector,
particularly in transportation, real estate and utilities, while public
investments were mainly capital spending by public enterprises in
transportation, oil and gas, education and utilities.
Endless possibilities
Commenting
on Malaysia's third-quarter performance, Alliance Research chief
economist Manokaran Mottain said the economy was still driven by
domestic demand, led by private consumption and investment activities,
which reflected the Government's drive to stimulate income growth,
improve and develop infrastructure, and ensure a steady flow of foreign
capital.
However, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz
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%.
The 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 forecasted to
grow at 13.3% in 2013, up from 11.7% in 2012, driven by the rollout of
the ETP. Public investment is forecasted to expand by 4.2% in 2013, as a
result of higher capital outlays by non-financial public enterprises
and development expenditure by the Federal Government .
The
Finance Ministry has said the prospects for the services sector are
expected to remain upbeat with the accelerated implementation of key
initiatives under the National Key Results Area and continued investment
in the seven services sub-sectors under the National Key Economic Areas.
These
initiatives are geared towards driving the wholesale and retail trade,
finance and insurance, and communication sub-sectors, which are
forecasted to grow 6.8%, 5.2% and 8.2% in 2013.
Though the United
States and Europe have some way to go before they can again enjoy
pre-crisis growth rates, Malaysia looks set to stay on its stable
trajectory of growth, benefiting from wise economic planning and a
steady pace of growth.
A bright future lies ahead for Malaysia, a
nation earmarked to become a force that will reshape the global
landscape of tomorrow. As the country plays an increasingly important
role, it will no doubt offer Malaysians and the world a destination for
growth and endless possibilities.
By News Desk
The Star/Asia News Network
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