Sign up | Log in



Home  >>   Daily News  >>   Malaysia News  >>   Economy   >>   Malaysia's economy faces rough road ahead
NEWS UPDATES Asean Affairs    13 July 2012

Malaysia's economy faces rough road ahead


All signs still point to a rather rough road ahead for Malaysia's economy as leading indicators in the region continue to show weakness in economic activity with economists expecting an improvement only towards the end of the year.

The industrial production index (IPI), which measures overall manufacturing activity and factory output, would likely show year-on-year median growth again when the data is released this week by the Statistics Department.

A Bloomberg survey shows a year-on-year IPI growth of 4.6 per cent for May after a 3.2 per cent expansion in April.

However, most economists pointed out that this would be short-lived even though the gauge continued to grow for a second month as external demand, which rebounded with a 6.7 per cent rise year-on-year in May after contracting marginally two months in a row, remained volatile.

Oversea-Chinese Banking Corp Ltd economist Gundy Cahyadi told StarBiz that falling exports, especially from commodities, would only weigh on domestic demand.

He said it was unlikely that domestic demand would continue to prop up the economy over the next six months.

"The government is likely to continue being supportive, but without a stronger pick-up in private spending/investment, we don't expect the kind of strength that has been evidenced since late last year," Gundy said, adding that the relatively high fiscal deficit would be of concern if the Government continued to pump-prime the economy.

He said although there had been signs of further moderation in the global economy with the International Monetary Fund set to downgrade the global growth forecast again, the house's baseline scenario continued to point towards a stronger pick-up in global growth towards the later part of the year.

"The eurozone holds the main key to uncovering what's ahead for the global economy. As it is, plenty of uncertainties remain, but the conclusion to the recent European Union (EU) summit (notwithstanding the lack of details) suggests the commitment that leaders have on the EU project," Gundy said.

He added that more muddling through would be the case with poor economic growth in most eurozone economies almost guaranteed for the rest of the year and into 2013.

CIMB Investment Bank Bhd economic research head Lee Heng Guie expects the passage of growth to be bumpy with clearer signs only emerging in the later of the year as composite leading indices (CLIs) from the Organisation for Economic Cooperation and Development (OECD) as well as of emerging Asian economies continue to show weakness.

“The OECD's CLI fell 0.08 point in May (down 0.03 point in April), with the growth momentum clearly waning in advanced economies: CLIs for the United States and Japan decelerated for the fifth and fourth consecutive months respectively, whilst for the UK and eurozone, for the third and second months respectively,” he said in a research report.

Lee said weakness was also detected in the major emerging economies of China and India with CLI losses of 0.15 point and 0.18 point respectively in May.

Meanwhile, UOB KayHian's research head Vincent Khoo sees growth slowing in the second-half, reflecting a fall-off in exports to the Western world and China as well as the waning effect of fiscal stimuli such as the RM500 aid and the civil service pay hikes.

while the composite CLI of Asia's five largest economies has lost 0.12 point, although this was a slight moderation from the 0.13-point decrease in April.

“Weakness in the debt-battered eurozone, the United States and China has knock-on effects on regional economies via trade channels. High-frequency data such as purchasing managers' indices, industrial output and exports have softened in recent months, pointing to fast-decelerating growth in some core emerging economies,” he said.

Meanwhile, UOB KayHian's research head Vincent Khoo sees growth slowing in the second-half, reflecting a fall-off in exports to the Western world and China as well as the waning effect of fiscal stimuli such as the RM500 aid and the civil service pay hikes.

He said the slowdown would be at a measured and gradual pace.

"We predict second-half's downtrend to be orderly and for downside to be limited," Khoo said.

He added that this reflected growing consensus view for election results to be market-neutral, real gross domestic product growth of 4 per cent to 5 per cent driven by still ample domestic stimuli as well good corporate earnings growth visibility in 2012 at 9.9 per cent.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
  Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Today's  Stories    13 July 2012  Subsribe Now !
• Clinton, U.S. Firms highlight commitment to...   Subcribe: Asean Affairs Global Magazine
• Clinton says Asean central to Obama's Asia...  Asean Affairs Premium

• GMS countries, Japan adopt plan to boost...

Research Reports
on Thailand 2007-2008

•Textiles and Garments Industry

•Coffee industry

•Leather and footwear industry

•Shrimp industry

• Thailand to coordinate on Asean-China ties
• China says maritime declaration must be... 
• Asean yet to approve code to settle ...
• Asean+3 backs Thai connectivity initiative
• China calls for new 'blueprint' for Asean  
• Jakarta hosts 3rd Asean-Latin Business Forum  
• SBY, Merkel sign ‘Jakarta Declaration’ on...  
• China calls for peace at Asean Regional...  
• Malaysia's economy faces rough road ahead  
• Asean drafts rights declaration  

Asean Analysis              13 July 2012

Advertise Your Brand
• Asean Analysis- JuLy 13, 2012  
• Asean Analysis- JuLy 11, 2012 Sponsor Our Events

Asean Stock Watch      12 JuLY 2012 

• Asean Stock Watch-July 12, 2012 p

ASEAN NEWS UPDATES      Updated: 04 January 2011

 • Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent

• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore • Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline • Vietnamese PM projects 10-year socioeconomic plan


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


Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2020 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand