(MENAFNEditorial)
Core Views
* Malaysia's once-bloated current account surplus is coming under pressure from a combination of income account outflows and a dwindling trade surplus. We expect the narrowing of the surplus to continue forecasting it to come in at 2.5% of GDP in 2014 and 1.6% in 2015. However the risks are weighted to the downside with the emergence of a current account deficit over the next few years increasingly likely.
* Over recent years Malaysia's fiscal accounts have exhibited some worrying trends with spending rising as a share of GDP subsidy spending rising as a share of total spending and indirect tax revenues declining. Going forward we are optimistic that these trends will be halted as subsidy spending is reduced and a Goods & Services Tax (GST) is implemented which should help stabilise Malaysia's debt metrics and support private sector real GDP growth.
* Bank Negara Malaysia (BNM) will find itself under increasing pressure to hike interest rates over the coming months as consumer price inflation (CPI) pressures mount following the reduction of fuel and electricity subsidies. However we expect the central bank to maintain the policy rate at 3.00% amid growing disinflationary signs emanating from weakening money supply growth which should see CPI pressures ease in H214.
Full Report Details at
- http://www.fastmr.com/prod/951904_malaysia_country_risk_report_q2_2015.aspx?afid=101
Major Forecast Changes
* We have revised down Malaysia's current account surplus for 2014 and 2015 forecasting it to come in at 2.5% of GDP in 2014 and 1.6% in 2015 rather than the 3.5% and 2.7% previously expected. Even with these revisions the risks are weighted to the downside as the pickup in domestic investment activity and the still-wide consolidated public deficit pose risks of a current account deficit over the coming years.
Key Risks To Outlook
* Malaysia's economic outlook remains vulnerable to external shocks. This is compounded by increased public spending on welfare subsidies in recent years. We caution that the government's failure to address its fiscal...
The Malaysia Country Risk Report helps businesses with market assessment strategic planning and decision making to promote growth and profitability in Malaysia. It is an essential tool for CEOs Chairmen Finance Directors/CFOs Managing Directors Marketing/Sales Directors with commercial interests in this emerging market.
An influential new analysis of Malaysia's economic political and financial prospects through end-2019 just published by award-winning forecasters Business Monitor International (BMI).
Key Uses
* Forecast the pace and stability of Malaysia's economic and industry growth through end-2019.
* Identify and evaluate adverse political and economic trends to facilitate risk mitigation.
* Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
* Contextualise Malaysia's country risks against regional peers using BMI's country comparative Risk Index system.
* Evaluate external threats to doing business in Malaysia including currency volatility the commodity price boom and protectionist policies.
The Malaysia Country Risk Report by Business Monitor International (BMI) includes four major sections:Economic OutlookPolitical OutlookOperational RiskandKey Sector Outlook.
Economic Outlook:
How will the Malaysia' economic policy-making and performance impact on corporate profitability over 2015-2019?
BMI provides our fully independent 5-year forecasts for Malaysia through end-2019 for more than 50 economic and key industry indicators. We evaluate growth and also forecast the impact of economic management.
Economic Outlook Contents
The Malaysia Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019 set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
Data:
* Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita) population inflation current account balance and the exchange rate.
* BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk and rates the business environment within a global and regional context.
Written Analysis:
* Economic Activity - real GDP growth employment inflation consumption (retail sales and confidence).
* Balance of Payments - trade and investment current and capital account.
* Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
* Exchange Rate Policy - currency controls foreign investment flows exchange rates and foreign exchange reserves.
* Fiscal Policy - macroeconomic strategy and policies government finance and tax reforms.
* Foreign Direct Investment - approvals inflows and climate.
* External Debt - debt profile (short and long-term plus public and private sector obligations).
* Global Assumptions - forecasts for each year to end-2019 covering: major commodities growth in key regions inflation and interest and exchange rates in the United States Japan China and the eurozone.
Key Benefits
* Rely upon BMI's 100% independent forecast scenarios for Malaysia and underlying assumptions - we take no advertising and are privately-owned.
* Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Malaysia sourced and fully maintained by BMI from an extensive network of private sector government and multilateral contacts.
* Gain key insights into the current and future direction of government economic policy which could significantly affect your company's business prospects from BMI's team of analysts and economists.
Political Outlook:
What are the political risks to doing business in Malaysia over the next 5-years?
BMI's Malaysia country Risk Index evaluates the short- and medium-term threats to political stability.
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