Malaysia Has Diversified, Competitive Economy and Healthy Banking Sector, Says Economist
SINGAPORE, 18 July 2012 - Malaysia's economy is diversified, competitive and has a healthy banking sector, says a Senior Economist at ABN Amro Group Economics.
Maritza Cazebas said these were positive points to soften the impact of a global economic slowdown.
She said the Malaysian economy performed well during the first quarter of the year.
"But the slowdown of the global economy and weak external demand are weighing on its outlook. Malaysia remains one of the countries most highly exposed to external demand.
"We expect annual growth to moderate to the four per cent range in 2012 from 5.1 per cent last year," she told Bernama.
When asked whether Malaysia was an investor and business-friendly nation, she said: "Malaysia is making the right moves to sustain investment.
"It offers an investor friendly environment. This is reflected in the high rankings obtained in the Global Competitiveness (21/142) and Doing Business (18/183) indicators," she said.
On the Government Transformation Programme initiated by Prime Minister Datuk Seri Najib Tun Razak, the analyst said the programme to tackle corruption, improve education and upgrade rural infrastructure was a key commitment in improving the investment environment.
"Progress in these areas will make growth more inclusive," she said.
Cazebas pointed out to the downside as well, given the projected slowdown in growth and the relatively high public debt.
She said scope for discretionary fiscal support appeared limited.
Noting that Malaysia continued to subsidise electricity and fuel consumption and policies to lower these subsidies (long promised and repeatedly delayed) represented a wild card to the inflation pattern.
She said inflation had increased gradually since 2009, but remained subdued.
"We think that the government will look to avoid reducing subsidies at a time of growing external uncertainty and rising risks to growth.
A major challenge, she said was to move further up the value chain and to prevent losing market share to other low-cost producing countries.
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