Credit Suisse revises GDP outlook to 5.3pc

CREDIT Suisse has revised its gross domestic product (GDP) outlook upwards to 5.3 per cent for Malaysia from five per cent as it expects a strong boost from the tourism sector in conjunction with Visit Malaysia Year (VMY) 2014.

"Tourism in Malaysia will likely get a major boost from VMY 2014 as well as positive spillover impact from political turbulence in Thailand," its economist Santitarn Sathirathai said in a report yesterday.

It revised its earlier projected improvement to the current account surplus, from 2.8 per cent to 3.3 per cent.

Malaysia's current account surplus stood at 3.8 per cent last year.

"This is based on our expectation that tourist arrival growth will accelerate from around four per cent last year to double-digits this year.

"Strong tourism growth, together with the anticipated pick-up in merchandise exports from a global recovery, should provide a boost to both overall exports of goods and services and GDP growth this year."

Malaysia's tourist arrivals will gain in 2014 due to the depreciation of the ringgit against the US dollar and also the political turmoil in Thailand.

The Thai political turbulence is a bane to Thai and Singapore tourism, but potentially a boost to Malaysian and Indonesian tourist arrivals.

"Our analysis suggests that visitor arrivals in Malaysia and, to a lesser extent, Indonesia enjoyed a statistically significant lift during political unrest in Thailand.

"On the contrary, Singapore's tourist arrival growth tends to suffer during these episodes."

On the outlook for the ringgit, the research house remains cautious on the ringgit.

The ringgit is expected to find some support in the near-term, on the basis of the anticipated better growth and current account dynamics as well as Bank Negara Malaysia intervention.

High foreign ownership of Malaysia's local currency debt will continue to leave ringgit exposed to bouts of sell-offs in United States rates, it said.

Its equity strategy team also highlighted that Malaysia will benefit from positive news such as Kuala Lumpur being voted the fourth best shopping city in the world for two consecutive years, Malaysia being the 10th most visited country in the world in 2012 and 25 per cent annualised increase in tourist arrivals from China.

Another factor is three of the world's largest shopping malls are in Malaysia - One Utama, Mid Valley and Sunway Pyramid - all in the Klang Valley and this will benefit the airports, the airlines, casinos and hotels.

Read more: Credit Suisse revises GDP outlook to 5.3pc [You must be registered and logged in to see this link.]