Economy to grow 5.5% in 2014: economist

Economy to grow 5.5% in 2014: economist

Malaysia's economy is expected to grow 5.5 percent in 2014 - up from a 4.5 percent growth last year, according to Dr Shane Oliver, head of investment strategy and chief economist at AMP Capital. This should be helped by monetary easing in the last year or so, along with a slight pick-up in global growth from three percent in 2013 to around 3.5 percent in 2014, noted Oliver.

Earlier, it was reported that Douglas McWilliams, of the Institute of Chartered Accountants in England and Executive Chairman at the Wales Chief Economist and Centre for Economics and Business Research Ltd, had expected the Malaysian economy to be brighter in 2014, given exports growth and the recovering global economy.

Separately, United Overseas Bank (UOB) also estimated the country's economy to grow by 5.2 percent in 2014.

Alvin Liew, Senior Economist at UOB, was quoted as saying the introduction of tax reforms, subsidy rationalisation as well as the government's other initiatives in Budget 2014 would bring more revenue whilst containing fiscal deficit at 3.5 percent of the gross domestic product.

Oliver agreed with the two forecasters, but also added Malaysia's tax reform could create volatility and uncertainty.,

"I think [we] should be positive for economic growth as the combination of a good and services tax and reduced subsidies and personal tax should result in a more efficient tax system," he said.

Overall, 2013 proved to be a good year for investors as various threats faded and the global economy remained in a cyclical 'sweet spot' of improving growth, low inflation and low interest rates,resulting in solid overall returns.

Meanwhile, 2014 will likely see improving growth globally, including in Australia. With inflation and interest rates remaining low, this should provide a positive backdrop for growth assets even as bond yields gradually continue to drift higher, said Oliver.

“The main risk to keep an eye on is a sharp sell in bond yields ; perhaps on the Federal Reserve System tapering or much stronger growth.”
Rebecca Liew, Editorial Assistant at PropertyGuru