BANGKOK, Jan 13 — Malaysia is forecast to achieve robust growth of 5.2 per cent this year, driven by private consumption, investments and exports, although falling oil prices in recent months have put pressure on exports and government budget.
The forecast reflected moderation of growth from the 5.7 per cent estimated last year owing to the introduction of the Goods and Services Tax in April, higher inflation and a tighter monetary stance, said the United Nations Economic and Social Commission for Asia and the Pacific (Escap).
In its 2014 Year-end Update of Economic and Social Survey of Asia and the Pacific, Escap said the moderating effects on domestic demand of the policies were expected to be offset by improvement in exports, particularly for electronics.
“Private consumption will continue to benefit from favourable labour market conditions and investments from the Economic Transformation Programme, which has established a pipeline of infrastructure and industry projects since its launch in 2010,” it said.
The report said developing countries in Asia and the Pacific were forecast to grow at an average of 5.8 per cent this year, up from 5.6 per cent in 2014, driven by improved economic performances in Bangladesh, India, Indonesia, Papua New Guinea, South Korea and Thailand.
The report was released by United Nations Under-Secretary-General and Escap executive secretary Dr Shamshad Akhtar here today.
Shamshad said growth in the region was expected to pick up slightly but for many countries, it would remain below potential due to their failure to sufficiently undertake domestic structural reforms required to increase their productive capacity.
“It is worrisome that the regional economic growth continues to be trapped below the level before the financial crisis level,” she said.
“Countries faced with capital outflow due to negative fundamentals should be more judicious and vigilant regarding intervention in foreign exchange market to support their currencies.”
On the fall in oil price, she said this was a particularly critical and opportune time to decrease subsidies not only to reduce budgetary strains but also prepare governments for the near future when global financing may be even more challenging to secure.
“Reducing subsidies can raise significant public financial resources for productive investment in the region and could make needed funds available for financing sustainable development,” she said. — Bernama
