M’sia posted decent export growth in Q4
KUALA LUMPUR (Bernama) – Malaysia was the only Southeast Asian market to deliver decent export growth in the last quarter of 2012, says The Royal Bank of Scotland plc (RBS).
Leading by continued strong domestic demand and an improvement in exports, particularly the electronics sector, Malaysia has reached its cyclical trough and has started to grow modestly, its Head of Research for Asia Pacific (excluding Japan) Sanjay Mathur said.
“I believe that the strong domestic demand in Malaysia and the positive employment outlook will likely sustain, especially in light of the upcoming increase in minimum wages.
“It is also why the investment indicators, such as commercial vehicle sales, fund-raising in capital markets and capital good imports and others, have appeared reasonably firm,” he told reporters at RBS Malaysia’s economy outlook briefing.
He also noted the increase in Malaysia’s trade surplus amid the stable-to-stronger exchange rate, with November’s surplus higher at $3 billion as compared to $1 billion in July 2012.
“Domestic demand had been spurred by the government’s relatively expansionary fiscal policies, which are now beginning to be tightened. At the centre stage of this adjustment has been spending,” he added.
Mathur said growth in government spending is now roughly in line with nominal gross domestic product (GDP), a sharp correction from the pace between February and July last year.
“As the country sees broad-based income growth across its population and matures into a higher income country, it is also experiencing a steadily developing and highly diverse wealth management sector.
“The improvement in growth has not been accompanied by high inflation, with headline inflation remaining below 1.5 per cent year-on-year. We expect Malaysia’s GDP growth this year to be 5.5 per cent,” he said.
Meanwhile, RBS Co-Head of Market Structuring, Asia Pacific Stefan Masuhr noted Malaysia is one of the fastest developing economies in Asia, and is experiencing constant growth in its population’s income.
“The demand for wealth management services, structured investment services and Shariah compliant products has increased.
“The financial needs of consumers become more varied and sophisticated, and there will be an increased demand for more high quality and innovative retail financial services, including ringgit-denominated investment products such as credit-, Index- and full-linked notes,” he said.
On the ringgit, Head of RBS Market Strategy for Asia Pacific Drew Brick said the local currency’s recent performance has largely been in line with the sell-off in US dollar rates, with the corporate issuance pipeline remaining strong and the gross supply this year likely to top RM1 billion.