SUMMARY: MALAYSIA GROWTH OUTLOOK BEYOND 2013 • Global recovery to support 2H13 growth – Exports recovery and domestic demand to raise growth uptrend in 2H13 projected at 5.7% versus 4.2% in 1H13. Maintain our 2013 GDP forecast at 5.0%. • Fiscal consolidation to pick up pace – gradual removal of subsidies has begun and soon electricity tariff would be imposed; deficit target of 4.0% for 2013 is on track. • Inflation to pick up – Rise in petrol prices and transportation cost to start in 3Q13 but full impact to be felt after 2014. CPI likely to exceed 3.0% next year from our projection of 2.5% this year. • Interest rate to stay pat – Current level is supportive and keeping at this levels stems uncertainties and installs investor confidence; possible increase in rates in 2014 • Macro balance manageable – In spite of current flux in capital flows and dwindling CA balance, external reserves to remain high, federal debt to remain manageable (below 55%) and fiscal deficit to narrow • ST Ringgit to remain volatile – In the ST USD/MYR to fluctuate between 3.15-3.35. Fundamentals to support ringgit in the medium to LT. Our year-end target is 3.17. • Risk to growth – hard landing in China, severe capital outflow, derailment of Japan’s Abenomics, ETP project delays, Eurozone debt problem resumes, QE taper and tightening signal, etc. • Outlook 2014 – Improvement in global economy (US, EU and Japan) to spillover into 2014 but subsidy rationalisation and possible GST implementation may weigh down on growth. Uncertainty remains.
Posted on: Wed, 11 Sep 2013 08:46:30 +0000
Trending Topics
Recently Viewed Topics
© 2015