Malaysia's economic outlook should remain stable next year with the support of domestic consumption and investments, which will continue to be resilient, said an International Monetary Fund (IMF) representative.
IMF deputy division chief of Asia and Pacific department, Dr Rodrigo Cubero, said that Malaysia's gross domestic product (GDP) next year should be strong.
“We see strength in domestic demand and investments, and expect them to remain robust in Malaysia entering 2013,” he told reporters after delivering a public lecture on “The Global and Asia and Pacific Economies: Outlook and Risks” in Kuala Lumpur yesterday.
The Government has underlined that Malaysia is expected to achieve full-year GDP growth of 5% or more in line with the positive economic performance in the first three quarters of 2012.
The growth in domestic demand has been supported by private investments, while the soft global economy has led to a slowdown in external demand.
He said China, Malaysia's biggest trading partner, was expected to see a high growth rate of between 8.2% and 8.8% next year after a slowdown in the first half of this year which later stabilised in the second half.
“Economic growth in the Asian region is projected to pick up modestly next year, but risks are tilted to the downside for the region which may include a hard landing in China, sustained drop in growth for other regional economies and a sharp increase in commodity prices,” Cubero added.
Exports from Asian economies had slowed since mid-2011, mainly due to a sharp fall in external demand primarily from the eurozone. However, the overall domestic demand in the region has been resilient, including in Asean countries.
He said that commodity prices were expected to remain stable next year but noted that shocks in food or oil prices were potential risks that would lead to higher inflation.
“A pick up in commodity prices is a risk for inflation, especially since food is one of the most important components in consumption.
“However, Malaysia may benefit from shocks in oil prices since the country is an oil exporting country,” Cubero added.
On the global economic outlook for next year, he expects a moderate recovery but did not rule out the uncertain outlook led by an escalation in the eurozone crisis and the “fiscal cliff' in the United States.
“The numbers for the global economy gathered and published in October were bullish, and we anticipate a better outlook in the next update in January,” he said, estimating the world's GDP growth to be between 3.6% to 4.1% next year.
Cubero also expects the financial situation in the eurozone to improve. “It is a slight pick-up and not an ambitious assumption,” he added.