Mirror,Mirror |
What will 2013 be like after the year is over?
Will there be disastrous world events with butterfly effects on our economy? Will the impending elections paralyze investment?
This is RAM Berhad through its looking glass.
The economy is expected to grow by 5.3% year-on-year in 2013 before accelerating to 5.8% next year on robust domestic demand and the gradual revival of external environment.
Domestic
fiscal policy is expected to remain accommodative as the implementation
of key projects related to the Economic Transformation Programme to pick up speed during the year.
Medium-term growth projection for the country ismaintained a 5.5% to
6% , supported by a stable
expansion of the underlying factors of production.
As for domestic private consumption, it is
anticipated to chart healthy growth due to favourable labour-market conditions instrumentally aided by a slew of Government initiatives and handouts.
RAM expects that with an improved business
environment and relatively accommodative interest rates, private investment will expand further.
RAM is expectant that global conditions
will gradually recover this year as policymakers in systemically
important economies adopt an accommodative stance in an attempt to combat their
respective structural deficiencies.
Malaysia’s export
performance is expected to improve, in line with the revival of certain
advanced economies. Similarly, import growth will likely be sustained by the
resilient domestic economy, so they predict.
RAM foresee a fiscal policy
that remains supportive of economic activity while the growth of public
expenditure should moderate to meet the Government’s longer-term fiscal-consolidation
objectives.
RAM notes the larger role of
the “public-private partnership” method of financing in funding various
development projects.
According to RAM's economists,“Conversely, the nation’s
current-account surplus is expected to narrow as the acceleration of domestic investment
closes the private sector’s saving-investment gap and increases imports."
They added that domestic monetary
and financial conditions will remain relatively stable this year
while inflation would likely increase at a modest pace due to healthy domestic
demand conditions.
As such RAM sees inflation to be
moderate in the short term, with certain recently implemented policies exerting some longer-term upward price pressures, The foresee the central
bank likely to adjust upwards the benchmark interest rates by 25 basis
points this year from 3%.
[I have yet to see BNM in such a mode for a long time! Mostly it played 'chicken'.]
RAM opines that the ringgit might be more
volatile in the short term due to global risk aversion but would retain
considerable upside potential because of the currency’s strong fundamentals.
Meanwhile, they expect the global
economy to expand by 3.5% this year largely due to growth from the emerging
economies, with advanced economies expected to continue with their fiscal
consolidation.
RAM's caveat: They assume minimal
occurrence of and impact from negative demand shocks in the advanced economies,
along with limited disruption to global trade and supply of essential
commodities.”
Finally, this rating agency expects the US economy to
accelerate to a pre-crisis growth pace of 2.5%, Europe to stagnate due to the
enforcement of the European Fiscal Compact, which would improve the short-term
sustainability of public finances at the expense of immediate economic
growth, and 8.1% growth in China from intra-regional trade even as global economic
weakness weighed on the country’s economic expansion.
Do you believe RAM?
I think like most rating agency, they tread the middle path with all provisos and caveats right to the hilt!