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Economic Report 2012/2013: GDP to grow 4.5% to 5.5% in 2013

The Malaysian economy is forecast to grow between 4.5% and 5.5% in 2013, underpinned by domestic demand as measures implemented in the 2013 Budget pick up pace.

The government, which is keeping a tight rein on its expenditure, expects fiscal deficit to be reduced to 4% of GDP in 2013 from 4.5% in 2012.

"Growth will be supported by improving exports and strong domestic demand on the assumption that global growth will pick up, especially during the second half of 2013," it said.

The report said the 4% to 5% growth would translate into nominal gross national income (GNI) per capita growth of 6.4% from RM30,956 to RM32,947.

Private and public consumption, the largest component of real GDP, is anticipated to expand further by 4.2% in 2013 and "remain the main driver of domestic demand".

Domestic demand is expected to maintain its strong momentum driven by robust private investment and strong private sector consumption.

"Private sector activity will be supported by an accommodative monetary policy in an environment of low inflation coupled with a robust financial sector," it said, adding a recovery in the external sector will provide the impetus for private sector-led growth.

On the supply side, growth in 2013 is expected to be broad-based, supported by expansion in all sectors of the economy.

The government expects the services and manufacturing sectors to contribute 4.2 percentage points to the GDP growth.

Services sector is expected to grow 5.6% in 2013 from 5.5% in 2012 under the major initiatives of the NKRAs (National Key Results Areas) and continued investment in the seven services subsectors under the NKEAs (National Key Economic Areas).

Manufacturing is envisaged to expand at a stronger pace of 4.9% (2012: 4.2%), boosted by export oriented-industries following an anticipated recovery in global trade.

Domestic-oriented industries are also expected to benefit from better consumer sentiment and business confidence.

Emphasis will also be in mining and quarrying and this sector's growth is forecast to nearly double to 2.7% in 2013 (2012: 1.5%), boosted by higher production of crude oil and natural gas.

"Production of crude oil is projected to increase 3.6% to 600,000 barrels per day (bpd) versus (2012: 1.6%; 579,000 bpd) due to higher regional demand. Several new oil fields are expected to start production in 2013.

"Production of natural gas is projected to increase 4.3% to 6,530 million standard cubic feet per day (mmscfd) (2012: 5.5%; 6,259 mmscfd).

A recovery in the output of plantation commodities will drive the agriculture sector's growth of 2.4% (2012: 0.6%).

While construction is expected to grow at a slower pace of 11.2% (2012: 15.5%), it will continue to be underpinned by on-going construction under the Economic Transformation Programme.

The report notes the residential subsector is also projected to expand but at a moderate pace after several years of strong growth.

However, key housing developments particularly in Sungai Buloh and Bandar Malaysia in Sungai Besi, expected to start in 2013, would support residential construction activities, the report said.

(Source:biz.thestar.com)

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Malaysian economy