Malaysia is likely to see its gross domestic product (GDP) grow 5.1 per cent this year, driven by exports particularly with the improving US economy, says an economist.
Co-Head of Asian Economics at HSBC Bank in Hong Kong, Fred Neumann said the US GDP growth for 2011 is likely to be at 3.4 per cent from 2.9 per cent last year, partly due to the easing financial uncertainties following the fiscal stimulus and quantitative easing.
"I think all export-dependent economies in Asia, including Malaysia, will benefit this year with the stronger US growth," he said during a tele-conversation from Hong Kong with Asian journalists Monday.
Neumann said South Korea, Taiwan, Hong Kong, Singapore and Malaysia would be among the economies to benefit from the accelerating export, led by recovery in the US economy.
"Over last two years, China and India have led Asia out of the recession. This year, we add another lead to this recovery which is a stronger demand from US."
The economies of China and India would be relatively stable this year but growth would still be robust, while the extra driver for this year will come from US demand.
He said the stronger export would also allow the Malaysian government to implement long-term policies that could help the economy emerge from its middle income trap.
Presently its policies are more short-term measures designed to prevent a deeper recession and help in recovery, Neumann said.
He said while domestic consumption had been vigorous in 2010, a slowdown in consumption was expected because of rising inflation and increasing pressure to raise interest rate.
Asked on the mega projects proposed by the Malaysian government like the RM36 billion mass rapid transit, Neumann said the immediate expenditure will help to maintain domestic demand for the next two to three quarters.
During the tele-conversation, Neumann also presented the results of HSBC Emerging Markets Index (EMI) for the fourth quarter last year.
The EMI, based on the survey of 21 purchasing managers in 16 emerging countries, rose to 55.7 in the October-December 2010 period from 54.2 in the preceding three months.
The largest survey of emerging markets economic data, the EMI also showed that the emerging markets would increase by five-fold and will be bigger than the developed world by 2050, with nine markets in Asia among the world's 30 largest economies.
China will grow the fastest but India's growth rate will outpace China's by 2030, and other bright stars in Asia like Malaysia, Thailand, Indonesia will grow rapidly as education and policy systems develop.
Commenting on Malaysia joining the top 30 list by 2050, Neumann said quality human capital, infrastructures and investments will help long-term growth and also the country's commitment to come out of the middle-income trap.
Nevertheless, the local small and medium enterprises (SME) would have to play a critical role as the sector is expected to drive the Malaysian economy come into the higher growth trajectory, he added.