KUALA LUMPUR: Audit, tax and financial consulting firm, Deloitte, projects Malaysia’s gross domestic product (GDP) to maintain growth of between five to six per cent in the second quarter (2Q), supported by robust domestic demand.
Country managing director Tan Theng Hooi said Malaysia maintained status quo in the first quarter of this year, achieving real GDP growth of 5.6 per cent year-on-year, bolstered by higher domestic demand, even as real exports declined an estimated one per cent.
“The first quarter has been reasonably positive for the Malaysian economy having tided over the elections, suppressed production at the start of year and external headwinds.
“The growing economy is forecast to attract higher foreign direct investments this year in various sectors, including electrical and electronics, real estate, aerospace, solar energy, and medical services,” he said in a statement yesterday.
Tan said private consumption, which accounted for nearly 50 per cent of the GDP and had been a major driver of the Malaysian economy for the past eight quarters, grew significantly, exceeding exports which were limited by falling sales of vegetable oils and manufactured goods.
He said vegetable oils and manufactured goods, together constitute more than 60 per cent of Malaysia’s total exports.
He added that while the country’s exports to the slowdown-affected markets of the European Union and United States suffered, sales to Asean posted a double-digit increase, accounting for nearly 30 per cent, and up from 27 per cent last year.
However, Tan said a lingering concern in the Malaysian economy is the level of debt fuelling domestic demand, as household loans and liabilities rose 13 per cent year-on-year year in the first quarter of 2013, and is estimated at more than 150 per cent of the personal disposable income.
“Loans and liabilities are expected to continue their double-digit rise in the second quarter of this year, with no increase likely in the benchmark interest rate, which has remained at three per cent since the third quarter of 2011.
“With nearly half the household debt incurred to buy houses, the economy is vulnerable to any sudden slump in home prices, which have risen an average 9.5 per cent year over year for the past eight quarters,” he added.
Nevertheless, Tan said Malaysia’s economic outlook for the rest of this year appeared encouraging, with positive consumer and business sentiment.
“The coming quarter will likely be similar (to the first quarter), with domestic demand driving the economy, but exports remained a challenge and high levels of household debt posed a persistent risk,” he added. — Bernama