While Asia's economic growth remains weighed down by the ongoing eurozone debt crisis and weak US economy, the region is expected to weather the storm well through this year.
“Asia is more resilient owing to post-1990 reforms,” said the International Monetary Fund (IMF) resident representative Dr Ravi Balakrishnan, who added that the growth outlook for the region should remain solid despite the ongoing uncertainties.
The IMF is expected to have cut its growth forecast for the global economy. This was confirmed by Ravi during his presentation at the RAM Annual Bond Conference entitled “Making the Asian Bond Market a Reality”. The IMF's new estimates will be released next Monday.
According to Ravi, a hard landing in China remained an important risk to Asia's economic growth. But he maintained the view that China's hard landing was still a low probability event.
Maybank Investment Bank Bhd regional head, research and economics, PK Basu concurred, saying that he expected China to experience a soft landing this year.
This, however, did not change his opinion that the “mother of all property bubbles” was still in China. He said that was the longer term structural issue facing the world's second-largest economy, and that it could take some time before the problem unravelled.
Basu said China's gross domestic product (GDP) growth could slow to 7.3% this year, from a growth of 9.2% in 2011.
He expected China's GDP to slow further to around 5% in 2014 and 2015, as the country adjust towards a higher medium economy.
China's slowing down would spell bad news for several Asian countries including Malaysia, whose bilateral trade with China had become grown increasingly important in recent years. But economists said Malaysia should still be able to register relatively healthy growth as it remained supported by domestic demand, especially private investment.
“Malaysia is poised to see a sharp pick up in private investment,” RAM Holdings Bhd group chief economist Dr Yeah Kim Leng said. “The investment climate has improved substantially, thanks to many initiatives including the ETP.”
Transformation Programme,” he explained.
Yeah, however, emphasised that Malaysia still needed to accelerate its economic reform measures to further promote growth in private investment.
“Planning-wise, we are already there. It's a matter of proper execution,” Yeah said.
On that note, he said all state governments should also extend their support to the federal government's effort in executing economic reforms.
According to Yeah, there had been some investors complaining that there was still red tape and unnecessary bureaucracy at certain state levels.
This, he said, was one of the Archilles heels in improving private sector investment in the country.
Yeah noted the importance of doubling private investments in Malaysia to enable the country to build a dynamic economy and achieve its potential growth rate of 6% to 7% each year.
At present, private investment accounts for around 10% of Malaysia's GDP.
Yeah said Malaysia should focus on increasing that to 20% of GDP by 2015, and around 20% to 25% of GDP by 2020.