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Home  >>   Daily News  >>   Malaysia  News  >>   Economy  >>   Goldman raises Malaysia’s GDP forecast
NEWS UPDATES Asean Affairs        1  April 2011

Goldman raises Malaysia’s GDP forecast

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Goldman Sachs has raised Malaysia's 2011 gross domestic product (GDP) growth forecast to 5.5 percent from 5.2 percent previously, driven by robust domestic demand.

The company also raised the country's consumer price index (CPI) forecast to 3.6 percent from 3.4 percent previously.

“The growth target this year should be easily met, while inflationary pressures continue to build,” Goldman Sachs said in a research note yesterday.

It has revised its forecast for the Malaysian ringgit to 2.98, 2.90 and 2.85 against the US dollar from 3.00, 2.95 and 2.90 in three, six and 12 months respectively.

Goldman Sachs expects Bank Negara to resume its policy rate normalisation and restart the rate hike cycle at the upcoming meeting in May - the first rate hike of this year - after raising rates a total of 75 basis points last year.

However, high household leverage was likely to be a consideration against sharp rate hikes, it said.

Malaysia currently has one of the highest household debt ratios in the region, close to 80% of the GDP.“The concern over raising the debt burdens of households with sharp rate hikes is likely to prompt a relatively moderate rate hike cycle. We continue to expect a total of 50 basis points of rate hike,” Goldman Sachs said. It also expects Bank Negara to increase the statutory reserve requirement (SRR) ratio back to around the pre-crisis levels of 4% to reign in excessive liquidity and credit growth.

“Every 100-basis point hike in the SRR is estimated to withdraw around RM7bil-RM8bil of liquidity based on the current size of eligible liabilities,” it added.


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ASEAN  ANALYSIS

This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More

 

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