GDP to grow 5.5pc from 2013: Economist

KUALA LUMPUR: The Malaysian economy is expected to expand at an average
annual rate of 5.5 per cent from next year until 2016, says Justin
Wood, Chief Economist of the Economist Corporate Network.

He
said Malaysia's peformance was surprisingly strong in the first half of
2012, with gross domestic product (GDP) growing at a phenomenal 5.4 per
cent in the second quarter, defeating many odds previously.

Wood
also said the Economist Corporate Network is now performing due
diligence to revise upwards the full year GDP growth projection from an
initial target of 4.7 per cent.

He said the growth clearly
indicated that the Malaysian economy, together with the rise of other
economies in the Asean region, is getting resilience by its own to
buffer the external financial uncertainties.

"The resilience
stems both from a change in the character of Malaysia's export profile,
and from a robust domestic economy," Wood told a media briefing here
today.

He said Malaysia's consumers are spending, and the most
important of all, domestic investment into fixed assets including
infrastructure, property and machinery, is picking up after many years
of lacklustre activity.

Investment, he said is coming from both
the government and the private sector, which includes domestic as well
as foreign investors.

"The perception of Malaysia among foreign
investors has improved recently. Partly, this reflects a changing view
of the relative attractiveness of other investment opportunities in
Asia.

"But, partly, it also reflects changes in Malaysia
itself, especially the ongoing reforms under the Government
Transformation Programme and Economic Transformation Programme," Wood
said.

He said the Asia Business Outlook Survey 2012 by
Economist Corporate Network, which involved 500 multinationals,
indicated that 50 per cent of the respondents would increase their
investments in Malaysia, while the remaining 50 per cent is seeking to
keep their current investments.

"This is a very positive
outlook given that many companies are now afraid to increase their
overseas investment but in Malaysia's case, 50 per cent of the
respondents wanted to increase (their investments)," he said.

Meanwhile,
Wood said in the same survey, Malaysia was ranked fourth after
Indonesia, Vietnam and India in the list of Asian countries that are
becoming more vibrant in attracting production and manufacturing
investments.

He said Economist Corporate Network expected
Malaysia's foreign direct investment (FDI) ratio to climb steadily to
26 per cent of GDP by 2016.

Currently, the ratio is somewhere between 21 and 22 per cent of the economy, he added.

On
currency, Wood said the ringgit is expected to appreciate against the
US dollar to average at RM3.07 this year and to RM3 next year. --
BERNAMA