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Malaysia's economic scenario depends on demand, external factors [18-07-2012]  
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Malaysia's economic scenario next year will depend on domestic demand and external factors, particularly developments unravelling in the protracted eurozone debt crisis.

Malaysian Institute of Economic Research (Mier) executive director Dr Zakariah Abdul Rashid said the global economic picture was not very encouraging as China's economy was moderating while Europe's was shrinking.

He said the continuing weaknesses in the United States, particularly its weak job market, was also contributing to the sluggish economy.

“Europe has not addressed its real problems plaguing its economy,” he said at the Mier National Economic briefing.

As for the Malaysian economy, Zakariah said while private consumption was strong, it was still not significant and to solely depend on consumer spending was not fair.

“Private investment contributes a lot to domestic demand and the strength is partly due to the Economic Transformation Programme, he said.”

Zakariah said another issue that was of concern in Malaysia was that the investment outflow was more than inflow and this could be partly due to more Malaysian companies going abroad.

He said although the economy was moderating, it had not affected consumer sentiments due to the encouraging employment outlook, with unemployment in Malaysia hovering around 3%.

He said should economic growth worsened, there was room for Bank Negara to cut interest rate to boost economic growth and make borrowing cost cheaper.

“This is because Malaysia has a stable inflation, which now stands at about 1.7%.”

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