Growth to slow to 3.6pc in 2012, says RHB

Growth to slow to 3.6pc in 2012, says RHB

By Lee Wei Lian

November 15, 2011
Malaysian Insider

File photo of labourers working at a construction site in Kuala Lumpur. The Malaysian economy could slow down to 3.6 per cent next year. — Reuters pic

KUALA LUMPUR, Nov 15 — The Malaysian economy could slow down to 3.6 per cent growth next year from 4.5 per cent this year despite estimates of stronger growth in the third quarter, says the RHB Research Institute.

The research house said that it expects that real Gross Domestic Product (GDP) growth has grown at a faster pace of 4.6 per cent in the third quarter compared with four per cent in the second quarter due to a stronger increase in exports and a sustained increase in consumer spending.

It forecasts the global economy to experience protracted slow growth however, causing export growth to slow down sharply.

“We believe private investment is likely to have moderated in the third quarter given rising economic uncertainties,” said RHB in its report yesterday. “Growth, however, will likely be supported by the implementation of the Economic Transformation Programme projects.”

The Najib administration has embarked on a drive to transform the country into a high-income nation by 2020 with economic and government transformation programmes costing RM1.4 trillion to produce a RM1.7 trillion then.

The programme began last year with Prime Minister Datuk Seri Najib Razak giving almost monthly updates on new and recapped investments, with the private sector expected to account for 92 per cent of the investments.

The RHB report said that fixed capital formation was expected to moderate to 4.6 per cent in 2012, from five per cent estimated for 2011 and growth in public consumption to moderate to 4.9 per cent in 2012 compared with an estimated 6.5 per cent this year.

RHB is not the only research house to forecast growth at less than the government’s target of 5-6 per cent for next year.

Bank of America Global Research estimated Malaysia’s GDP to grow at 4.2 per cent in 2012 while Maybank Investment Bank said it expected Malaysia’s GDP to expand at between 3.5-4 per cent. CIMB Investment Bank forecast a GDP growth of 3.8 per cent next year.