Tweetchat: Malaysia’s growth potential questioned

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malaysia economyThe lower expectations for Malaysia’s GDP growth have raised question whether the country would eventually be able to achieve its target of becoming a high-income nation by 2030.

Around the same time when the Malaysian Institute of Economic Research revised downwards Malaysia’s economic growth forecast to 4.8 per cent for 2013 from the 5.6 per cent estimated earlier, accounting and consulting firm Ernst & Young said it has lowered its GDP growth projection for Malaysia this year to 4.7 per cent from its initial 5 per cent expansion forecast in April 2013.

The lowered target reflects the weak external demand that led to a comparably modest growth in the first half of this year.

“We expect soft external conditions to lead to another quarter of modest growth in the second quarter, but expect a pickup in the second half of the year, putting us at a growth rate of 4.7 per  cent – but lower than what we previously forecast,” said Ernst & Young Malaysia markets leader Azwan Baharuddin in a statement earlier in July.

Challenging external conditions led to a sharp slowdown in Malaysia’s GDP growth to 4.1 per cent in the first quarter this year from 6.5 per cent in the fourth quarter of 2012. Net exports subtracted 3.7 per centage points from annual growth, while government spending was surprisingly weak.

In order for the Malaysian economy to achieve growth of 4 per cent in the longer term, it will be crucial for the government to consolidate and push forward its reform agenda, Ernst & Young said.

“Future plans for growth such as the Economic Transformation Programme and the National Key Economic Areas (under the 10th Malaysia Plan) must likewise take into account these changes, and be implemented cohesively in order to meet its objectives,” said Azwan.

Do you think Malaysia will fall back behind its ASEAN peers in economic growth? What are other factors behind that and what should be done by the government to terms of an economic stimulus? What mistakes have been made? Does Malaysia’s slowing growth threaten its vision of a high-income nation? Join our Tweetchat on August 2 at 3pm Malaysia time (GMT +8) under https://twitter.com/insideinvestor

 

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Reading Time: 2 minutes

The lower expectations for Malaysia’s GDP growth have raised question whether the country would eventually be able to achieve its target of becoming a high-income nation by 2030.

Reading Time: 2 minutes

malaysia economyThe lower expectations for Malaysia’s GDP growth have raised question whether the country would eventually be able to achieve its target of becoming a high-income nation by 2030.

Around the same time when the Malaysian Institute of Economic Research revised downwards Malaysia’s economic growth forecast to 4.8 per cent for 2013 from the 5.6 per cent estimated earlier, accounting and consulting firm Ernst & Young said it has lowered its GDP growth projection for Malaysia this year to 4.7 per cent from its initial 5 per cent expansion forecast in April 2013.

The lowered target reflects the weak external demand that led to a comparably modest growth in the first half of this year.

“We expect soft external conditions to lead to another quarter of modest growth in the second quarter, but expect a pickup in the second half of the year, putting us at a growth rate of 4.7 per  cent – but lower than what we previously forecast,” said Ernst & Young Malaysia markets leader Azwan Baharuddin in a statement earlier in July.

Challenging external conditions led to a sharp slowdown in Malaysia’s GDP growth to 4.1 per cent in the first quarter this year from 6.5 per cent in the fourth quarter of 2012. Net exports subtracted 3.7 per centage points from annual growth, while government spending was surprisingly weak.

In order for the Malaysian economy to achieve growth of 4 per cent in the longer term, it will be crucial for the government to consolidate and push forward its reform agenda, Ernst & Young said.

“Future plans for growth such as the Economic Transformation Programme and the National Key Economic Areas (under the 10th Malaysia Plan) must likewise take into account these changes, and be implemented cohesively in order to meet its objectives,” said Azwan.

Do you think Malaysia will fall back behind its ASEAN peers in economic growth? What are other factors behind that and what should be done by the government to terms of an economic stimulus? What mistakes have been made? Does Malaysia’s slowing growth threaten its vision of a high-income nation? Join our Tweetchat on August 2 at 3pm Malaysia time (GMT +8) under https://twitter.com/insideinvestor

 

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