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Country Forecast Malaysia March 2013 Updater

  • Publication Date:March 2013
  • Publisher:EIU
  • Product Type: Report
  • Pages:16
  • ISBN:469253

Country Forecast Malaysia March 2013 Updater


The government's term ends in April. In the coming months politics will be dominated by preparations for the general election that is due in mid-2013. The Economist Intelligence Unit expects the ruling Barisan Nasional (BN) coalition to win the poll. The BN hopes to regain the two-thirds majority in the lower house that it lost at the 2008 poll, but it will struggle to do so. The government will fail to balance the budget in 2013-17 as it continues to allocate funds to infrastructure projects. The monetary authorities will maintain an accommodative stance in 2013 but will tighten policy from 2014 onwards. The economy is expected to remain on a sustainable growth trajectory in the forecast period. GDP growth is forecast to slow slightly in 2013, to 4.6%, from 5.6% in 2012. Annual inflation will average 3% in 2013-17, compared with 2.5% in 2008-12. The planned introduction of a new goods and services tax and the gradual withdrawal of subsidies are expected to push up consumer prices from this year. The current account will remain in surplus in the forecast period, to the tune of 6.1% of GDP on average, compared with an estimated 8% in 2012.

Key changes from last month

Political outlook

The governments of Singapore and Malaysia have agreed to build a high-speed rail link between the city state and the Malaysian capital, Kuala Lumpur. This is in line with our view that ties between the two countries will deepen in 2013-17.

Economic policy outlook

Bank Negara Malaysia (the central bank) left its main policy interest rate unchanged at a scheduled meeting in January. We expect the bank to maintain an accommodative policy stance throughout 2013.

Economic forecast

Real GDP growth quickened to 6.4% year on year in the fourth quarter of 2012, from 5.3% in the third quarter, driven by surging domestic demand. The economy expanded by 5.6% in 2012 as a whole. We expect growth to slow to 4.6% in 2013.

Country Forecast Malaysia March 2013 Updater
Malaysia at a glance: 2013-17
Country forecast overview: Highlights
Country forecast overview: Key indicators
Country forecast overview: Business environment rankings
Country forecast overview: Malaysia's business environment at a glance
Fact sheet
Outlook for 2013-17: Political stability
Outlook for 2013-17: Election watch
Outlook for 2013-17: International relations
Outlook for 2013-17: Policy trends
Outlook for 2013-17: Fiscal policy
Outlook for 2013-17: Monetary policy
Outlook for 2013-17: Economic growth
Outlook for 2013-17: Inflation
Outlook for 2013-17: Exchange rates
Outlook for 2013-17: External sector
Data summary: Global outlook
Data summary: Gross domestic product, current market prices
Data summary: Gross domestic product, at constant prices
Data summary: Gross domestic product by sector of origin
Data summary: Growth and productivity
Data summary: Economic structure, income and market size
Data summary: Fiscal indicators
Data summary: Monetary indicators
Data summary: Employment, wages and prices
Data summary: Current account and terms of trade
Data summary: Foreign direct investment
Data summary: External debt
Data sources and definitions
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