Forecasts assume that national elections expected to be held in late April
2013 go smoothly and that the government pursues prudent economic and
Private consumption will get support f...
rom robust labor market
conditions, low inflation, higher incomes, and, from the 2013 budget,
further transfer payments and tax concessions. New minimum wages of
RM900 a month for Peninsular Malaysia and RM800 for East Malaysia
came into effect from January 2013 and benefit 27% of all workers.
The tight labor market suggests that job losses resulting from the new
minimum wage will likely be temporary.
Nevertheless, growth in private consumption will likely moderate
from 2012. Softer global commodity prices will weigh on incomes
and consumption spending, particularly in rural areas. Further, the
government is expected to resume phasing down subsidies on fuel and
other items or move to a system that better targets subsidies. A proposed
broad-based consumption tax that aims to reduce the government’s
reliance on the oil sector for public revenue would also dampen consumption growth temporarily if introduced.
Consumer sentiment remains positive: the index of consumer sentiment compiled by the Malaysia Institute of Economic Research edged higher in the fourth quarter of 2012 (Figure 3.26.6). However, the business conditions index compiled from a survey of manufacturers declined on concerns about the outlook for domestic and export sales
Note: Above 100 indicates expansion for manufacturing and optimism among consumers.
Source: CEIC Data Company (accessed 20 March 2013) , Asian Development Bank - Malaysia, Economic Data ( http://www.adb.org/sites/default/files/ki/2012/pdf/MAL.pdf )
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