Country Report Malaysia January 2009

Outlook for 2009-10

• Political uncertainty and instability are likely to persist in the months ahead, despite an expected orderly transfer of power from the current prime minister, Abdullah Badawi, to the deputy prime minister, Najib Razak, in March 2009.
• The leader of the opposition alliance, Anwar Ibrahim, will continue with his campaign to destabilise the Barisan Nasional (BN) government by persuading BN legislators to switch to the opposition.
• The Economist Intelligence Unit expects the BN coalition to remain in power in the forecast period. The BN still has a sufficiently large majority to pass the bulk of new legislation unchallenged.
• Following downward revisions to our global growth forecasts, we now expect Malaysia's economy to slip into recession this year. A modest recovery in the country's main export markets will help to lift GDP growth to 2.8% in 2010.
• Inflation is forecast to moderate markedly in 2009-10, from an estimated average of 5.5% in 2008. Domestic demand growth will be sluggish, and global prices for oil and industrial raw materials will fall sharply in 2009.
• The merchandise trade surplus will fall to US$26.9bn in 2009, from an estimated US$35.4bn in 2008. Although the current-account surplus is also expected to narrow relative to 2008, it will remain sizeable.

Monthly review

• Mr Abdullah appears keen to secure his political legacy before he hands power to Mr Najib in March. In December 2008 he introduced bills that would pave the way for the creation of two important new agencies.
• The ruling BN government suffered a political setback in January, when it failed to retain the Kuala Terengganu parliamentary seat in a by-election. The seat was won by the opposition candidate, Abdul Wahid.
• Leaders from the five states currently controlled by the national-level opposition agreed in December to work together in a bid to counter the effects of the downturn in the global economy.
• In December the government unveiled details of a pilot project that, if successful, could speed up the deportation of foreign nationals working illegally in the country.
• The latest economic data releases point to signs of weakness. In November industrial output contracted for the third consecutive month, while exports declined for the second month in a row.
• The headline inflation rate fell to 5.7% year on year in November, from 7.6% in the previous month.

Source: Country Report

This report covers the following industry codes:
SIC Code: 1
NAICS Code: 11

This report covers the following industry codes:
SIC Code: 1
NAICS Code: 11