By Aidila Razak
Alliance Research is expecting the Malaysian economy to grow by 5.5 percent in 2013, a 0.5 percentage point upgrade from its previous call, due to global recovery and strong domestic demand.
According to the research house, the growth will be seen through “two distinct halves of recovery”, growing 5.2 percent in the first half and a stronger 5.8 percent in the second half.
The higher growth will not push inflation up in the first half, it said, but reform policies will see inflation bumped up in the second half of 2013, post general-election.
“Policies like minimum wage as well as…(the) subsidy rationalisation plan are inflationary and expected to push price pressures,” it said.
This would not drive up food prices, as commodity prices globally remain stable.
“Overall, we expect inflation to remain moderate at around 2.5 percent this year, compared with 1.6 percent for 2012,” it said.
It said that domestic demand will be supported by stable growth in private consumption, albeit at a slower pace.
“The growth will be supported by stable employment and income conditions; as well as positive impact from the recent handouts like BRIM 2.0 and other handouts announced under the Budget 2013,” it said in a note today.
It said that domestic consumption will support the two main growth drivers—the manufacturing and services sector.
“While the manufacturing sector will be led by domestic-oriented industries, output from the services sector will be driven by stronger domestic demand emanating from accelerated spending on 10th Malaysia Plan and Economic Transformation Programme (projects),” it said.
The service sector is expected to grow at 6.1 percent while manufacturing is expected to grow at 3.9 percent.
It added that a double digit 11.2 percent rise in gross investment is also expected in 2013.
“Growth is supported by capital spending in telecommunications, real estate and aviation and the on-going implementation of projects in the oil and gas sector,” it said.
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