Afternoon Highlight (02/01/13/01/699) Economist: Growth to pick up in second half of year

Economist: Growth to pick up in second half of year


KUALA LUMPUR: Economic activities in Malaysia are likely to show some weakness in the first half of 2013 before a pick up in the second half of the year.

The Leading Index (LI) which monitors the economic performance in advance increased 0.1 per cent in October 2012 to 112.1 points from 112.0 points recorded in the preceding month.

CIMB Investment Bank chief economist Lee Heng Guie said Malaysia's LI mirrored the downward trend of the OECD composite leading index (CLI).

He said most sub-components of the LI weakened further, indicating a fragile export recovery.

"We expect the LI to remain stuck on a 'moderate and slow' growth trajectory in the near term until there is greater clarity about the eurozone debt crisis and the issues surrounding the US fiscal cliff before the year-end."
According to the Statistics Department, three components that contributed positively to the increase were real imports of semi conductors (0.3 per cent), number of new companies registered (0.2 per cent) and Bursa Malaysia Industrial Index (0.1 per cent).

The annual change of the LI slowed to 0.3 per cent in October 2012 as against 1.4 per cent in the previous month.

Growth of the lagging index (LGI) also moderated from 3.2 per cent in September to 2.6 per cent in October while month-on-month, it rose 0.5 per cent due to the improvement in number of investment projects approved and number of new vehicles registered.

"We expect Malaysia's economic growth to moderate in the fourth quarter and the first half of 2013 before picking up momentum in the second half of the year," added Lee.

According to the Statistics Department, the Coincident Index (CI), which measures the current economic activity, declined by 0.3 per cent in October. The drop was due to the decrease of capacity utilisation in manufacturing sector (-0.3 per cent), real contributions to EPF (-0.2 per cent) and volume index of retail trade (-0.1 per cent).

"Supported by the level of Diffusion Index for LI which is fluctuating along 50.0 per cent since August 2012, suggests that the Malaysian economy will continue to expand at a slower pace in the months ahead."

Source: Business Times
Date: 2 January 2013
Afternoon Highlight (02/01/13/01/699)