Country Report Malaysia May 2009

Summary

Attempts by both the ruling Barisan Nasional (BN) coalition and the Pakatan Rakyat (PR) opposition to increase their representation in national and state parliaments will ensure that the political scene remains fluid in 2009-10.
The Economist Intelligence Unit expects the BN coalition to remain in power in 2009-10. The BN still has a sufficiently large parliamentary majority to pass the bulk of new legislation unchallenged.
There is a risk of mass demonstrations if the leader of the PR, Anwar Ibrahim, is found guilty of sodomy at a trial in July.
We expect the Malaysian economy to contract by 3% in 2009. Exports of goods and services are forecast to fall by 18.8% in 2009, which would be the steepest decline on record.
Malaysia is expected to experience mild deflation in 2009 as domestic demand weakens and global prices for oil and industrial raw materials fall sharply.
The merchandise trade surplus will fall to US$34.1bn in 2009, from an estimated US$44.2bn in 2008. Although the current-account surplus is also expected to narrow this year, it will remain sizeable.

Najib Razak has been sworn in as Malaysia's sixth prime minister, following the official resignation of his predecessor, Abdullah Badawi, in early April.
Soon after coming to office, Mr Najib unveiled a new cabinet, with the lion's share of ministerial posts going to the dominant party in the BN coalition, the United Malays National Organisation (UMNO).
UMNO held its annual conference and triennial leadership elections in March. Delegates elected Muhyiddin Yassin as the deputy president of UMNO, he was later officially appointed deputy prime minister.
Three by-elections took place on April 7th. Neither the BN nor the PR succeeded in taking control of a seat away from the other.
Following discussions between Malaysia and the OCED in April, the country has been taken off a blacklist of tax havens that have failed to comply with an international tax standard on exchange of information.
Domestic economic indicators published in April continued to point to weak activity. In February exports and manufacturing output continued to fall on a year-on-year basis.

This report covers the following industry codes:
SIC Code: 37;53;59;49;60;48
NAICS Code: 336;44;22;52;517