IMF retains Malaysia's GDP growth forecast

The International Monetary Fund had in February forecast that Malaysia's economy would expand by four per cent.


KUALA LUMPUR: The International Monetary Fund (IMF) yesterday left its 2012 growth outlook unchanged for five Asean economies including Malaysia.

In its latest World Economic Outlook released from Washington, the IMF projected a 5.4 per cent regional growth for 2012 and 6.1 per cent growth for 2013, a marginal drop from its previous projection.

The international body, however, warned that the second half of 2012 would see much weaker growth in both advanced and key emerging markets.

Growth momentum in the second quarter slowed in various emerging markets economies notably Brazil, China and India while incoming data for the US also suggest less robust growth.

The euro area periphery has been at the epicentre of a further escalation in financial market stress, triggered by rising political and financial uncertainty in Greece and banking sector problems in Spain.

Downside risks to this weaker global outlook continue to loom large, the IMF added.

The most immediate risk is still that delayed or insufficient policy action will further escalate the euro area crisis.

The first quarter provided an upward surprise by 0.25 per cent to 3.6 per cent compared with the IMF's April forecasts, while global trade rebounded in parallel with industrial production which benefited trade-oriented economies.

"For Asia, growth was also pulled up by a greater-than-anticipated rebound in industrial production, spurred by the restart of supply chains disrupted by the Thai floods in late 2011, and stronger-than-expected domestic demand in Japan," it noted.

The IMF had in February forecast that Malaysia's economy will expand by four per cent. It said the weaker global growth in the second half of 2012 will affect annual growth in 2013 through base effects.

Growth is projected to remain relatively weaker than in 2011 in regions connected more closely with the euro area (central and eastern Europe in particular).

In contrast with the broad trends, growth in the Middle East and North Africa will be stronger in 2012-2013 relative to last year, as key oil exporters continue to boost oil production and domestic demand.

In emerging and developing economies, the IMF said policymakers should stand ready to adjust policies, given spillovers from weaker advanced economic prospects and slowing export growth and volatile capital flows.