MALAYSIA's full-year gross domestic product (GDP) is poised to grow by as much five per cent, more brisky than the 4.3 per cent forecast earlier, Singapore's United Overseas Bank (M) Bhd said yesterday.
"The Malaysian economy is on track to deliver full-year growth at the top of the official forecast range of 4 per cent to 5 per cent," said UOB's executive director and head of research and investor relations Jimmy Koh.
He added the government's investment plans for nation-building activities under the Economic Transformation Programme will continue to support domestic demand.
The fresh projection from UOB comes just weeks after Bank Negara Malaysia announced that the nation's economy grew at a faster-than-expected pace.
Malaysia's economy for the second quarter grew by an unexpected 5.4 per cent year-on-year, helped by an expansion in manufacturing and robust domestic demand.
UOB's upward revision of the Malaysian economy is believed to be among the first by a foreign-owned entity, to peg the growth at five per cent or more.
Last week, respected international firm Goldman Sachs raised Malaysia's GDP growth projection to 4.6 per cent from 3.8 per cent for 2012.
Goldman Sachs also expects Malaysia's GDP growth to pick up steam next year. The New York-based firm expects Malaysia's economy to expand by as much as 5.3 per cent in 2013.
Meanwhile, UOB also said that strong domestic activity and sustained fixed investment in the first half of 2012 compensated for slower export growth as a result of weaker demand from the eurozone and the US.
According to Koh, strong private consumption and investment are expected to continue to provide some insulation against the expected weakness in external demand in the second half of 2012.
The recently-announced minimum wage for the private sector which will be implemented by late October is also expected to boost growth in the last quarter of this year and support private consumption growth in the medium term.
"Furthermore, Malaysia is expected to maintain its expansionary fiscal policy and continue with its ETP projects ahead of the elections," Koh said.
Koh noted that UOB has provided financing for infrastructure projects under the ETP such as the integrated mass rapid transit system, the extension lines under the light rapid transit system and the low-cost carrier terminal projects.
Meanwhile, Koh said the ringgit is likely to weaken to 3.15 against the US dollar by year-end due to uncertainties over the European sovereign debt crisis.
"A thriving domestic economy and a steady interest rate outlook in Malaysia will be positive for the ringgit even though the global risk environment is still dependent on developments in the eurozone," he said.
"We have revised our US dollar to the ringgit to 3.10 and 3.15 for end-third quarter of 2012 and end-fourth quarter of 2012 respectively," he said.