Fiscal policy is expected to start to tighten later this year. The government has targeted a narrower fiscal deficit equivalent to an estimated 4% of GDP in 2013. The central bank is anticipated to keep
interest rates at levels supportive to economic growth into 2013 while
standing ready to raise rates if ...
price pressures gather steam.
Robust domestic demand and an anticipated gradual reduction
of subsidies during the forecast period will nudge prices up, with
moderating factors anticipated to be soft global food and fuel prices and
a firm ringgit. The impact of the new minimum wage on companies’ total costs is expected to be modest. Inflation is projected to pick up to average 2.2% in 2013 and 3.0% next year (Figure 3.26.8). For the fi rst 2 months of
2013 infl ation was just 1.4%.
External demand is seen improving only gradually. A better outlook
this year for the People’s Republic of China and India, two important
export markets, will benefi t Malaysia’s commodity exports though
prices of commodities such as palm oil and liquefi ed natural gas will
remain under downward pressure. Th e anticipated recovery in industrial
economies in 2014 will improve prospects for electronics and other
manufactured exports. Import growth will likely moderate in 2013 but
still outpace growth in exports, given strong domestic demand. Th e drag
on GDP growth exerted by net exports will lessen this year.
On the balance of these infl uences, GDP growth is forecast at 5.3%
in 2013, accelerating a little to 5.5% next year as the global economic
environment improves. Th e current account surplus is forecast to decline
further as trade surpluses subside and defi cits persist in the income and
services accounts (Figure 3.27.9).
Source: Asian Development Outlook
database - http://www.adb.org/sites/default/files/pub/2013/MAL.pdf
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