Published: Wednesday March 20, 2013 MYT 6:07:00 PM
Updated: Wednesday March 20, 2013 MYT 8:04:24 PM
Bank Negara: Economy grew 5.6% in 2012; to grow 5%-6% in 2013
By JOSEPH CHIN
KUALA LUMPUR: Bank Negara Malaysia (BNM) forecasts the economy to expand by between 5% and 6% in 2013, from 5.6% in 2012.
In its annual report 2012 released on Wednesday, it said economic activity would be underpinned by the resilience of domestic demand, and supported by a gradual improvement in the external sector.
“Domestic demand, which recorded the highest rate of expansion over the recent decade in 2012, is expected to remain the key driver of growth in 2013, albeit at a more moderate pace,” it said.
BNM said domestic demand was expected to grow at 8.1% in 2013, slower than the 10.6% growth in 2012.
Private expenditure was expected to grow at a slower pace of 9.1% from 10.7%: Of which, consumption growth would be 7.1% (2012 - 7.7%) and investment 15.6% (2012 - 22%).
BNM explained that private investment would be driven by the continued capacity expansion of domestic-oriented firms, ongoing implementation of projects with long gestation periods and a gradual improvement in external demand.
Private consumption was expected to grow at a more moderate rate in the second half of the year, but it will continue to be supported by sustained income growth and healthy labour market conditions.
Public expenditure was expected to remain strong -- after the exceptional growth in 2012 -- to 5.4% (2012 - 10.3%), of which consumption could see slower growth of 3.6% (2012 - 5.0%) and investment 7.5% (2012 - 17.1%).
BNM added the lower growth in public sector spending was due to the ongoing consolidation of the government's fiscal position while the role of the private sector gains greater significance.
In terms of output, manufacturing was expected to grow at a stronger pace of 4.9% (2012 - 4.8%) but services slower at 5.5% (2012 - 6.4%); construction 15.9% (2012 - 18.5%).
However, agriculture was expected to pick up to grow at 5% (2012 - 1.4%) and mining 5% (2012 - 1.4%).
BNM noted that in line with the pace of expansion in domestic demand, imports of capital and consumption goods were also expected to moderate.
It said labour market conditions would remain favourable, with the unemployment rate projected to remain low at 3.1% of the labour force in 2013.
Headline inflation was expected to average 2% - 3% in 2013 due to the expected higher global prices of selected food commodities and adjustments to domestic administered prices.