Economists: Malaysian exports to drive 2014 GDP growth

by **Cals** Mon 10 Feb 2014, 10:13

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Monday, 10 February 2014 09:51

KUALA LUMPUR (Feb 10): Malaysian exports are seen driving the nation's economic growth in 2014 as domestic demand expansion slows, according to economists.

Hong Leong Investment Bank Bhd economist Sia Ket Ee said broad-based expansion in major export segments in December 2013 had prompted the view that "the worse in trade performance is over and net exports will contribute positively to GDP growth in 2014".

"We reiterate our view that real GDP growth will remain steady at 5.0% yoy in 2014 (2013e: +4.7%), with positive contribution from net exports offsetting more moderate domestic demand growth," Sia wrote in a note today.

Last Friday, the Statistics Department said Malaysian exports rose 14.4% to RM65.74 billion in December 2013 from a year earlier. Imports climbed 14.8% to RM56.27 billion.

Full-year exports increased 2.4% to RM719.81 billion from a year earlier. Imports rose 7% to RM649.19 billion.

Alliance Research Sdn Bhd economist Manokaran Mottain expects demand from advanced countries to drive Malaysian export expansion.

Citing examples, Manokaran wrote in a note that although adverse weather had impacted US manufacturing in January 2014, a robust recovery was seen in the Eurozone where manufacturing activity, as measured by the purchasing managers' index, rose to 54 from December’s 52.7.

"As such, we forecast 2014 (Malaysian GDP) growth to come in stronger at 5%, with an expected acceleration of economic activities in 2H14 – led by steady but improving export demand from the advanced economies, which would likely mitigate the overall moderation in the domestic demand.

"For 2014, we maintain our exports and imports forecast at around 5% and 9%, given the expected recovery in external demand from advanced economies (2.4% and 7% in 2013)," he said.