Bank Negara Malaysia Annual Report 2013 Economy to remain steady in 2014, says central bank

by **Cals** Thu 20 Mar 2014, 18:56

Bank Negara Malaysia Annual Report 2013 Economy to remain steady in 2014, says central bank

Business & Markets 2014

Written by Adrian Wong of theedgemalaysia.com

Thursday, 20 March 2014 10:34

KUALA LUMPUR: The Malaysian economy is expected to remain on a steady growth path in 2014, expanding by 4.5% to 5.5% from 4.7% last year, says Bank Negara Malaysia (BNM).
In its 2013 annual report released yesterday, the central bank said the growth momentum will be supported by better performance in the external sector amid some moderation in domestic demand.
BNM said gross exports are forecast to expand by 5.8% in 2014 due to an improvement in demand from the advanced economies and sustained growth in regional economies.
“The growth in manufactured exports is expected to improve in 2014, driven by both E&E (electrical and electronic) and non-E&E exports. E&E exports are expected to expand at a modest pace in 2014, supported by the improvement in investment activity in the US, in particular corporate spending on IT-related equipment.”
BNM said domestic demand will remain the key driver of growth, albeit at a more moderate pace, reflecting continued public-sector consolidation.
“Private investment is forecast to register robust growth for the fifth consecutive year, driven by the ongoing implementation of multi-year projects and the improvement in external demand. Private consumption will be underpinned by healthy labour market conditions and sustained income growth.”
The central bank projects private investment growth to remain robust at 12.6% in 2014. The projected growth rate is higher than the 2000-2012 average growth of 8.8%.
BNM also anticipates lower growth for public consumption, following the ongoing consolidation of the government’s fiscal position, while public investment is projected to register higher growth, supported by both government and corporate capital expenditure.
“Public investment will register higher growth of 2.9%, underpinned by public enterprises’ (PEs) investment and the federal government’s development expenditure. Investments by PEs reflect the continued implementation of key infrastructure projects, particularly in the oil and gas, utility and transportation sub-sectors.”
However, the central bank expects household spending to moderate towards its long-term trend growth, reflecting in part the impact of higher inflation.
Headline inflation is expected to average 3% to 4% in 2014 due mainly to domestic cost factors.

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This article first appeared in The Edge Financial Daily, on March 20, 2014.