Thursday, December 8, 2011

CIMB Research expects Malaysia's GDP to grow at 3.8% in 2012

KUALA LUMPUR (Dec 8): CIMB Research expects Malaysia's GDP growth to run at a slower pace of 3.8% in 2012 from an estimated 5.0% in 2011.

In its regional economic compass for 2012 released on Dec 7, CIMB Research's chief economist Lee Heng Guie said that despite an improvement in 3Q11, a continued strong growth was far from assured.

Exports will still be pressured from a slowing global economy and highly uncertain sovereign debt crisis in the eurozone, he said.

'We expect the underlying domestic demand to grow unevenly in 2012 due to (1) concerns over domestic growth prospects and stock price volatility may damp consumer sentiment; and (2) a slower pace of investment activity as firms remain cautious due to external uncertainties,' he said.

Lee said Malaysia printed a higher than expected GDP growth of 5.8% year-on-year in 3Q11 (4.2% in 2Q) fuelled by stronger exports and resilient domestic demand.

'Still, it was not enough to wipe away our cautious view about the economy as long as external uncertainties persist,' said the report.

Meanwhile, Lee said emerging Asia cannot decouple completely and is bracing for weaker growth due to knock-on effects of the travails in the west.

'Risks are clearly to the downside (1) continued market turbulence emanating from an inadequate policy response to sovereign debt pressures in the euro area's peripheral economies, (2) a prolonged period of subdued growth for the developed economies, (3) vulnerability in emerging economies as they deal with weaker growth and volatile capital flows, and (4) renewed inflation pressures inflicted by volatile commodity prices and supply shocks,' it said.

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