This is a news article from the online STAR written by Edy Sarif.
Here is the report.
The Malaysian Institute of Economic Research (Mier) has revised its gross domestic product (GDP) growth forecast for this year to 5.2% from 3.7% after seeing improvement in consumer and business confidence.
Its director Dr Zakariah Abdul Rashid said the upward revision was also based on signs of a global economic recovery and higher commodity prices.
“The recent data on private consumption and export has shown an improvement, especially in the last quarter of 2009 and this year’s first quarter,” he told reporters on the sidelines of the 15th Corporate Economic Briefing.
He also said the country’s economic growth was forecast to reach 5% year-on-year in 2011.
However, Zakariah declined to comment on the recent forecast of growth rates by JPMorgan, which projected Malaysia’s economy would grow by 7.7% this year.
He said that Mier’s Consumer Sentiment Index and Business Conditions Index were higher by 4.6 points and 5.2 points respectively quarter-on-quarter in the first quarter this year.
“All sector indices recorded modest gains in the first quarter, with the exception of Retail Trade Index and CEO Confidence Index,” he said.
Private consumption improved further by 1.7% in the fourth quarter last year, producing a small growth of 0.8% in 2009 supported by strengthening consumer confidence and labour market prospects.
“Mier expects private consumption to accelerate by 5.6% this year and a further 6.8% in 2011. Exports and imports of goods and services are expected to rise by 8.2% and 8.8% respectively this year,” Zakariah said.
He added that on a sector basis, Mier expected the agriculture sector to expand by 2.6% this year and 2.2% in 2011 on robust consumption of palm oil by China, India and the euro zone, as well as firmer global commodity prices.
“Global economic recovery is expected to boost the production and consumption of crude oil further in 2010-2011. Higher global demand for electronic chips will propel manufacturing growth to 6.2% year-on-year in 2010, and easing to 3.4% in 2011 on base effects,” he said.
Zakariah said the Mier Residential Property Index was up 12.3 points in the first quarter this year as property demand was anticipated to continue moving up owing to the current low interest rate regime, attractive financing packages by developers, a stronger economic recovery and a prominent asset reflation theme.
He said overall consumer price index was expected to grow by 2.2% this year.
Touching on the ringgit, Zakariah said Mier believed it was still undervalued and would possibly touch 3.00 to the US dollar by the end of the year.
“The strengthening of the ringgit is in line with the appreciation of other regional currencies, such as the yuan against the US dollar. The ringgit will be moving in a direction that will accommodate the long-term growth of the Malaysian economy,” he said.
On the overnight policy rate (OPR), Zakariah said it was expected to settle at 2.7% by end-2010 as core inflation had been raising faster than overall inflation and firmer economic expansion would further lift the OPR to 3.25% next year.
[It is interesting to note that MIER continues to be as conservative as the Government is their forecast. Are they playing safe?]
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