The Economic ReportFriday, September 28, 2012
MALAYSIA made further progress towards a high-income and developed nation in 2012 despite heightened uncertainties in the external sector.
WITH prospects for the external sector remaining weak, economic management in 2013 will be centred on strengthening domestic demand and maintaining macroeconomic stability.
BUDGET 2013 will focus on improving the rakyat’s quality of life.
WITH prospects for global growth remaining modest at 3.9%, domestic demand will continue to drive the country’s economy boosted by the measures in the Budget 2013.
THERE are several issues that need to be addressed to enhance the well-being of the rakyat.
THE local economy is forecast to grow between 4.5% and 5.5%.
MOVING towards 2013, the outlook for the global economy is expected to remain modest with marginally higher projections for growth and lower unemployment in most regions.
THE world economic growth momentum picked up gradually in the first quarter of 2012.
TOTAL Federal Government expenditure will remain high at RM252.4bil on account of new and increased commitments.
THE consolidated financial position of state governments is projected to record a lower current account surplus of RM5.9bil in 2012 compared to RM10.4bil in 2012, on account of higher operating expenditure amid a significant decline in revenue.
VALUE-add of the mining sector rebounded 1.3% (January - June 2011: -6.6%) after experiencing severn consecutive quarters of contraction.
DURING the first half of 2012, the services sector grew 5.8% (Jan to June 2011: 7.1%), largely driven by sustained domestic demand and travel-related activities.
VALUE-add of the agriculture sector contracted marginally by 1.5% during the first half of 2012, (January - June 2011: 3.8%), largely affected by lower output in the plantation subsector, particularly oil palm and rubber.
VALUE-add of the manufacturing sector expanded 5% during the first half of 2012 (Jan - June 2011: 4.1%).
THE construction sector posted a strong growth of 18.9% during the first half of 2012 (January - June 2011: 3.4%), the fastest pace since 1995.
AGGREGATE domestic demand is projected to increase further by 9.4% in 2012 (2011: 8.2%) driven by strong private sector activity.
GROWTH in Malaysia’s total trade is envisaged to expand 4.4% to RM1.32 trillion in 2012 (2011: 8.7%; RM1.27 trillion) amid the more challenging external environment.
MANUFACTURED exports continued to expand 4.1% to RM301.8bil during the first seven months of 2012 (January-July 2011: 2.3%; RM289.8bil) following strong external demand for non electrical and electronics (E&E) (particularly major resourced-based products) which contributed 55.7% to total manufactured exports.
EXPORT earnings from primary commodities declined 1.2% to RM94.1bil during the first seven months of 2012 (January-July 2011: 21.1%; RM95.2bil) following lower export earnings of palm oil and rubber.
GLOBAL foreign direct investment (FDI) inflows increased significantly by 16.4% to US$1.5 trillion in 2011 (2010: 1.9%; US$1.3 trillion). This increase was supported by higher profits of transnational corporations and relatively high economic growth in developing countries, despite the uncertainties in the advanced economies.
THE volume of global trade has been projected to grow at a slower pace at 3.8%, from 5.9% in 2011 on the back of lower demand from advanced economies, following the euro-zone crisis and slower growth in the US.
THE Chiang Mai Initiative Multilateralisation (CMIM) is a regional financial safety net of growing importance within the global financial system. The system has been designed to provide short-term liquidity support arrangement for Asean+3 member countries during a financial crisis.
AS THE labour force is one of the critical elements for the nation’s success in becoming a high-income and developed nation by 2020, the New Economic Model (NEM) identified several key issues in the market that may hinder the nation’s vision.
THE labour market will remain stable through 2012, with low unemployment rate at 3.2%, thanks to robust domestic activities.
MONETARY policy continues to be supportive in providing a stable environment to promote growth, while managing the risk of inflationary pressures and avoiding financial imbalances.
LENDING by the banking system continued to support economic activities during the first seven months of 2012.
CONTINUOUS efforts were taken to further position Malaysia as the leader in Islamic finance as Islamic finance continued to gain significant importance in the global financial market.
GROSS funds raised in the capital market increased sharply by 46.3% to RM155.5bil in the first seven months of 2012, supported mainly by infrastructure financing needs.
THE Financial Sector Blueprint, which was launched on Dec 21 2011, charts the direction of the financial sector as the country transitions into a developed and high-income economy by 2020.
WITH global growth expected to be moderate in 2013, the Malaysian economy is expected to grow between 4.5% and 5.5%, supported by resilient domestic demand underpinned by income growth as well as strong private sector activity generated by the ongoing initiatives under the Economic Transformation Programme.