OCBC downgrades Malaysia 2013 GDP growth to 5%

by **Cals** Mon 24 Jun 2013, 14:04

OCBC downgrades Malaysia 2013 GDP growth to 5%
Business & Markets 2013
Written by Bernama
Monday, 24 June 2013 13:30

KUALA LUMPUR (June 24): OCBC Bank has downgraded its 2013 gross domestic product (GDP) growth forecast for the Malaysian economy to five per cent year-on-year, from 5.4 per cent previously.

The move comes on the back of weak global GDP growth.

The bank's economist, Selena Ling said global GDP growth is likely to average around 3.0-3.5 per cent this year, which is not much of an improvement compared to 2012.

"Malaysia's growth prospects have also come under pressure, with the first quarter performance missing market expectations," she said in a statement today.

She said the path of recovery looks to be more divergent than ever among developed economies.

"While financial markets have stabilised in the eurozone and risks of another sovereign default in the region are significantly lower compared to six months ago, the real economy remains in the doldrums, with record high unemployment still weighing on any probability of a quick turnaround story.

"However, eurozone officials seem to be slightly less aggressive in pushing for tight fiscal austerity measures to be adopted in the peripheral member countries, and this should provide some near-term support for the region as a whole," she added.

Selena said the domestic economy had remained robust so far this year, with investment growth continuing to be strong at 13.2 per cent year-on-year in the first quarter, supported by good growth in both private and public investments at 10.9 and 17.3 per cent year-on-year.

"Despite earlier concerns that political uncertainties might weigh in on investment growth in the country, the first quarter GDP data indicated that Malaysia's longer-term growth potential has been the more important driving factor of domestic growth.

"It is also imperative to note that the spillover impact from Malaysia's investment growth, since 2012, will continue be the underlying support for private consumption, whose growth is likely to sustain at more than 7.5 per cent this year," she added.