News Room - Business/Economics

Posted on 18 May 2010

OCBC sees 6.7% GDP growth for M'sia this year

OCBC Bank expects Malaysia's gross domestic product (GDP) to grow by 6.7% this year compared with minus 1.7% last year.

 

The country's economy expanded by 10.1% in the first quarter.

 

OCBC economist and treasury research & strategy head Selena Ling said the growth would be driven by exports and pick-up in domestic demand.

 

“Exports are now growing at their fastest pace since 1998, and exports of major commodities are almost back to pre-crisis levels.

 

“Anticipation of commodity prices rising will continue to benefit Malaysia, as export earnings from oil and gas and palm oil will continue to surge later this year,” she said at a talk on 2010 Economic Outlook hosted by OCBC Bank for journalists and businessmen.

 

“Simultaneously, private consumption has sustained the improvement seen towards the end of last year, while the stronger ringgit and a better global growth outlook may spur double-digit expansion in private investment.”

 

Ling said inflation should remain modest around 2.6% this year as fuel subsidy cut and the implementation of goods and services tax had been postponed.

 

She expects the labour market to grow, with unemployment rate projected to improve to about 3.3% by the year-end.

 

“The budget deficit is expected at 3.5% to 5.5% of GDP this year,” she added.

 

Ling also see overnight policy rate (OPR) hitting 2.75% by end 2010 and eventually return to its pre-crisis level of 3.5%.

 

“Ringgit liquidity remains ample and the stronger-than-expected recovery should provide sufficient headroom for Bank Negara to raise interest rates,” she said.

 

She expects China to achieve a “very healthy” GDP growth of 9.8% this year.

 

“Across Asia, the gradual normalisation of monetary stance and the fiscal stimulus withdrawal is expected to proceed in the second half-year, notwithstanding the recent European uncertainties.”