The New Year is just around the corner. In many ways, it will be a
relief to say farewell to 2012, a year which has seen the advanced countries
struggling amid seemingly unending economic and financial uncertainty.
Naturally, the tail-end of the
year is a time to look ahead with hope and expectation. And indeed, there is
growing optimism among investors about the global economy. However, is this
realistic when some experts refuse to rule out the possibility of an overall
contraction?
When presenting its Economic
Outlook in late November, the Organisation for Economic Cooperation and
Development (OECD) warned that the global economy was expected to make “a
hesitant and uneven recovery” over the coming two years.
OECD secretary-general Angel
Gurra pointed out that we were not yet out of the woods. “The near-term outlook
is not only weak, but also downside risks predominate. The lingering euro-area
crisis remains a serious threat to the world economy. At the same time, if left
unresolved, the US fiscal cliff' could tip the US economy into recession and
weigh on global growth,” he added.
The eurozone is expected to see a
0.4 per cent contraction this year and a further 0.1 per cent fall in 2013.
Even if the White House and congressional leaders can hammer out a short-term
agreement on the budget that will avoid the fiscal cliff, growth in the United
States is forecast to grow at 2 per cent next year, down from the 2.6 per cent
forecasted in May.
With the United States and Europe
battling to revive their economies, the OECD believes the world economy will
grow by 3.4 per cent in 2013, up from 2.9 per cent this year.
This will likely be supported by
the economic expansion of the likes of China, Brazil and India, although they
too will be impacted by challenges faced in the West.
Malaysia too will contribute to
this forward momentum. Its economic performance has been strong, and it is
often recognised as among the emerging economies that will have a prominent
role on the world stage in the coming years.
The recent Country Brand Index
(CBI) 2012-13, for example, ranks Malaysia as third among the Future 15
tomorrow's leading country brands that have “great potential across a variety
of areas”.
Constructed annually by global
brand consultancy FutureBrand, the CBI measures and ranks global perceptions
around the world's nations based on elements such as their cultures,
industries, economic vitality and public policy initiatives.
Economic reforms
This year is the first time that
the index report incorporate the Future 15, which reflects six future drivers:
governance, investment, human capital, growth, sustainability and influence.
Published last October, the CBI
2012-13 report notes: “Malaysia's workforce, tourism and vast resources may
just be the secret to its success.”
That, of course, is not the full
picture. A key component of the Malaysian success story has been the sound
implementation of economic reforms since the nation's independence that has
transformed an exporter of raw materials into an emerging, multi-sector economy
driven by exports and supported by a well-developed regulatory system.
Forward-looking planning has
enabled the government to capitalise on the country's unique offering,
including a rich heritage and scenic landscapes, to support a thriving tourism
sector. Home to more than 15 per cent of the world's species, Malaysia is one
of the world's most bio-diverse areas.
The current emphasis is on
climbing the the economic ladder, and this is done via Government-led
initiatives such as the Government Transformation Programme (GTP) and the
Economic Transformation Programme (ETP), and a conscious effort to slowly
liberalise sub-sectors of our economy.
Also crucial are a focus on
building on the country's vast natural resources, a commitment to economic
openness, and a concerted effort to drive investments in infrastructure and
research and development. These are complemented by the encouragement of
innovation in business and amongst the workforce, and the development of
regional alliances.
Malaysia's economy has been
resilient amid the challenging global economic conditions, with real gross
domestic (GDP) product growth estimated at 5.1 per cent this year and 5 per
cent in 2013, according to the World Bank.
Its third-quarter performance
surprised on the upside with GDP expansion beating economists' median
expectations of 4.8 per cent; year-on-year growth in the quarter was 5.2 per
cent, with domestic demand fuelling economic activity and compensating for the slower
export demand from major trading partners affected by the ongoing economic
woes.
Domestic demand in the third
quarter continued to experience double-digit growth, increasing 11.4 per cent
from a year ago. The impetus for this was supplied by strong public and private
sector investment.
Private investments were
primarily driven by capital spending in the services sector, particularly in
transportation, real estate and utilities, while public investments were mainly
capital spending by public enterprises in transportation, oil and gas,
education and utilities.
Endless possibilities
Commenting on Malaysia's
third-quarter performance, Alliance Research chief economist Manokaran Mottain
said the economy was still driven by domestic demand, led by private
consumption and investment activities, which reflected the Government's drive
to stimulate income growth, improve and develop infrastructure, and ensure a
steady flow of foreign capital.
However, Bank Negara governor Dr
Zeti Akhtar Aziz cautioned that although GDP growth in the fourth quarter was
likely to continue that of the third quarter, there were some uncertainties in
the export sector. The central bank estimates that growth for the whole of 2012
will be at least 5 per cent.
The experts are cautiously
confident about Malaysia maintaining its economic performance in 2013. The
recent Malaysia Economic Monitor, a report by the World Bank, said Malaysia's
growth would likely weather a weak global environment and would grow robustly
in 2013.
Public and private investments
are expected to remain strong and lend support to economic growth in the new
year. Private investment is forecasted to grow at 13.3 per cent in 2013, up
from 11.7 per cent in 2012, driven by the rollout of the ETP. Public investment
is forecasted to expand by 4.2 per cent in 2013, as a result of higher capital
outlays by non-financial public enterprises and development expenditure by the
federal government.
The Finance Ministry has said the
prospects for the services sector are expected to remain upbeat with the
accelerated implementation of key initiatives under the National Key Results
Area and continued investment in the seven services sub-sectors under the
National Key Economic Areas.
These initiatives are geared
towards driving the wholesale and retail trade, finance and insurance, and
communication sub-sectors, which are forecasted to grow 6.8 per cent, 5.2 per
cent and 8.2 per cent in 2013.
Though the United States and
Europe have some way to go before they can again enjoy pre-crisis growth rates,
Malaysia looks set to stay on its stable trajectory of growth, benefiting from
wise economic planning and a steady pace of growth.
A bright future lies ahead for
Malaysia, a nation earmarked to become a force that will reshape the global
landscape of tomorrow. As the country plays an increasingly important role, it
will no doubt offer Malaysians and the world a destination for growth and
endless possibilities.
News Desk
Business & Investment Opportunities
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