UOB Malaysia raises Malaysia's GDP to 5% from 4.3%

KUALA LUMPUR: United Overseas Bank (Malaysia) Bhd has raised its forecast for Malaysia's full year gross domestic product (GDP) for 2012 to 5.0%, up from 4.3%.

UOB Group's head of research and investor relations Jimmy Koh said on Thursday Malaysia's economy "is on track to deliver full-year growth at the top of the official forecast range of 4.0% to 5.0%".

He added the government's investment plans for nation building activities under the Economic Transformation Programme (ETP) would continue to support domestic demand.

Commenting on the first half of 2012, he said strong domestic activity and sustained fixed investment in the first half compensated for slower export growth affected as a result of weaker demand from the Eurozone and the US.

As for the ringgit, he said there was some volatility in its trading against the US Dollar in the second quarter, due to problems in the Eurozone.

"While the markets have settled somewhat recently, the ringgit could face renewed downward pressure over ongoing Eurozone concerns," he said.

Koh said a thriving domestic economy and a steady interest rate outlook in Malaysia would be positive for the ringgit even though the global risk environment hinged on Eurozone developments.

"We expect the ringgit to edge lower against the US Dollar and reach RM3.15 by the end of the year," he said.