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Malaysia Economic Outlook

Malaysia: Cyclical Support But Structural Gaps

7 February 2010

We are raising our 2010 GDP forecast for Malaysia from 4.3%YoY to 4.8%YoY but keeping our 2011 forecast intact at 4.8%YoY. This will bring our GDP forecast in line with consensus for 2010. However, our 2011 forecast is marginally below consensus’ 5.0%YoY.

2010 Global Economic Outlook In a Nutshell (by Nomura Global Economics)

26 January 2010

2010 Global Economic Outlook (a report by Nomura Global Economics): The aftermath of the crisis should constrain the developed world recovery, but, led by a booming China, emerging markets look set for strong growth.

Malaysia Weekly: End of Deflation Doesn’t Mean Rates Are About to Rise Soon

24 January 2010
  • The end of technical deflation and start of policy exit in China doesn’t mean that Bank Negara will be in any hurry to hike rates soon
  • Large OPR hikes alone not seen to be effective with supply side inflation risks with a stronger MYR NEER likely more effective
  • Monetary accommodation to compensate for modest fiscal tightening
  • “Small adjustments” possible, but OPR to remain “below neutral” till investments pick up decisively

Malaysia Macro Outlook 2010: Cyclical Catch-Up and Structural Crossroads

11 January 2010

Near-term export-led cyclical catch-up is underway (albeit not in a straight path). Yoy GDP growth will probably peak at 7-8% in 1Q10, before moderating as base effects and earlier policy stimulus are gradually withdrawn. While 3Q09 saw a net portfolio inflow after 5 straight quarters of outflows, inflows and FX reserve accumulation remain small. Supply-side inflation pressures on subsidy reforms, with rates remaining below neutral until investment picks up decisively. Fiscal consolidation underway with reduced MGS/GII gross issuance, but calendar bias towards long end. Medium-term growth rebalancing requires tackling structural deficiencies.

Malaysia Macro: Detailing the Human Capital Deficit (Citi Group, 09 Nov 2009)

10 November 2009
  • Malaysia’s inadequacies in the area of human capital are a major obstacle to the private investment revival and industrial upgrading
  • Measures to upgrade indigenous stock of human capital have proven ineffective, thus increasing the urgency in reversing the ‘Brain Drain’ and importing foreign talent.
  • Lastly, there is the problem of a shortage in, and dependence of the Manufacturing, Construction and Services sectors on, low skilled, low cost foreign labor

Download Malaysia Macro Weekly: 09 Nov 2009