Press Release 2012
UOB Malaysia Raises Full Year Economic Growth Forecast for Malaysia to 5.0%
Strong domestic demand bolsters growth, but upside on Ringgit will be capped by the uncertainties in the Eurozone and US
Kuala Lumpur 23 August 2012 – United Overseas Bank (Malaysia) Bhd (UOB Malaysia) raises its forecast for Malaysia's full year gross domestic product (GDP) to 5.0%, up from 4.3%.
Mr Jimmy Koh, Head of Research and Investor Relations for UOB Group said, "Strong domestic activity and sustained fixed investment in the first half of 2012 compensated for slower export growth affected as a result of weaker demand from the Eurozone and the US. The Malaysian economy is on track to deliver full-year growth at the top of the official forecast range of 4.0% to 5.0% and the government's investment plans for nation building activities under the Economic Transformation Programme (ETP) will continue to support domestic demand."
The Malaysian Ringgit saw some volatility in its trading against the US Dollar in the second quarter, due to problems in the Eurozone. While the markets have settled somewhat recently, the Ringgit could face renewed downward pressure over ongoing Eurozone concerns.
"A thriving domestic economy and a steady interest rate outlook in Malaysia will be positive for the Ringgit even though the global risk environment is still dependent on developments in the Eurozone. We expect the Ringgit to edge lower against the US Dollar and reach RM3.15 by the end of the year," Mr Koh said.
Growth outlook for second half of 2012
Strong private consumption and investment are expected to continue to provide some insulation against the expected weakness in external demand in the second half of 2012. The recently announced minimum wage for the private sector, which will be implemented by late October, is also expected to boost growth in the last quarter of this year, and support private consumption growth in the medium term. Furthermore, Malaysia is expected to maintain its expansionary fiscal policy and continue with its ETP projects ahead of the elections.
Supporting Malaysia's Economic Transformation Programme
To help fuel the momentum of Malaysia's economic growth, UOB Malaysia has provided financing for infrastructure projects under the ETP. UOB Malaysia's Institutional Financial Services business has extended financing to several large infrastructure projects under the ETP such as the integrated urban mass rapid transit (MRT) system, the extension lines under the light rapid transit (LRT) system and the low cost carrier terminal (LCCT) projects. UOB Malaysia has also financed several Government-related Private Finance Initiatives (PFI) that focus on the education and healthcare sector.