Ernst & Young upbeat on Malaysian economy

KUALA LUMPUR: Malaysia is expected to do better this year, led by expansionary fiscal policies and strong government support, boosting investments and consumer spending.

Ernst & Young Malaysia markets leader Azwan Baharuddin said investment has been very robust, growing at more than 20 per cent in the third quarter of last year, supported by strong government support for infrastructure projects.

"Private consumption also maintained a strong growth in the third quarter at 8.5 per cent. Malaysia has performed well last year and we envisage full-year growth of 5.1 per cent, up from 4.5 per cent initially," he was quoted as saying in Ernst & Young's Rapid Growth Markets Forecast, which was released yesterday.

"While we expect growth to moderate in the first quarter of this year, supportive government policies in the development of talent and in technology adoption will continue to play a vital role in the development of Malaysia's long-term economic transformation and growth," he added.

On the Asean front, its rapid-growth markets (RGMs) are on a high growth momentum, propelled by the Asean Economic Community (AEC).

RGMs have reduced trade barriers over the last 20 years, opening their economies to trade and the transfer of knowledge, he said.

Over the next decade, bilateral trade between the emerging Asian economies will continue to increase as demand rises for more sophisticated consumer products from their expanding middle-class markets.

Azwan said Malaysian companies have consistently focused on trade within the region, with many companies opting to expand their businesses into other emerging Asian economies, notably Indonesia and Vietnam.

"These strong business relationships will no doubt provide a significant base for propelling Malaysia's growth momentum.

"It also aligns well with the region's plans for an Asean Economic Community (AEC) aimed at transforming Asean into a single market and production base by 2015," he added.

Moving forward, Azwan said Malaysia, as an upcoming RGM, can expect continued strong demand for its commodities while favourable domestic market conditions will help buoy earnings growth in 2013.

"The country's financial resilience, a factor of her strong international reserves, high domestic liquidity and healthy flow of foreign investments into the country will drive Malaysia's economic transformation to a develope state by 2020," he said.