Bloomberg News

Malaysia 2012 Growth to Miss Official Target, Institute Says

January 19, 2012

(Updates with minister’s comment in fifth paragraph.)

Jan. 19 (Bloomberg) -- Malaysia’s growth will probably miss the government’s forecast this year amid the faltering global economy, according to the Malaysian Institute of Economic Research.

Southeast Asia’s third-largest economy will expand 3.7 percent in 2012, the partly-government funded institute said in a statement in Kuala Lumpur today, cutting its earlier estimate of 5 percent gross domestic product expansion. This is below the 5 percent to 6 percent government forecast in its Oct. 7 budget statement.

“Economic growth will likely get bumpier in the months ahead,” the institute said in the report. “Growth in the last quarter of 2011 is expected to be much lower on account of external developments. Latest monthly economic indicators are already suggesting that.”

The World Bank said yesterday developing growth in Asia- Pacific economies will slow for a second straight year on Europe’s debt crisis and weaker global trade. Malaysia likely expanded 4.9 percent in 2011, the institute said, missing the government’s growth forecast of as much as 5.5 percent.

“This year is going to be a bit more difficult than last year, although there are some positive news coming from the U.S.,” Mustapa Mohamed, International Trade and Industry Minister, told reporters in Kuala Lumpur late yesterday. “This year, our priority is to manage this more difficult international environment.”

Consumer prices slowed to a nine-month low of 3 percent in December, giving Malaysia’s central bank scope to leave interest rates unchanged for a fourth meeting this month to support growth as the world economy falters.

“A weaker U.S. recovery, particularly amid the unfolding developments in the long, drawn-out euro zone debt crisis, would more than likely cause more near-term growth pains in Malaysia,” the institute said. “A surge inflation seems unlikely at the moment.”

Nations from Thailand to Indonesia took advantage of easing inflation to lower borrowing costs late last year.

--With assistance from Gan Yen Kuan in Kuala Lumpur. Editors: Barry Porter, Stephanie Phang

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net


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