MIER projects economy growing by 5.6% this year

KUALA LUMPUR: Increasing domestic demand and sustainable exports are expected to drive the Malaysian economy to grow by 5.6% this year, according to Malaysian Institute of Economic Research (MIER).

Its economist and executive director Dr Zakariah Abdul Rashid said domestic demand was becoming the saviour of growth.

“I think Asean and (the) greater Asia region can help drive global growth, moving forward,” he said.

However, Zakariah said the actual strength of forecast growth would also depend on how strong the world economy would be when it pulled out of the current recessionary situation and recovered.

Speaking at the research outfit’s Malaysian Economic Outlook: Fourth Quarter 2012 Update, he said he expected the world economy to grow by 3.6% in 2013, which was higher than the forecast 3.3% in the previous year.

“Malaysia is located in a dynamic region in Asia and we are (in part) also riding on this advantage. We expect exports to be better in 2013 and this counts a lot (in forecasts) because of the bigger base.

“If exports can beat our forecast, then the actual economic growth rate will be higher as well,” he said.

MIER said inflation was expected to increase this year to 2.5% from a full-year forecast of 1.7% last year. Unemployment rate, meanwhile, is expected to remain at 3% for last year and 2013.

“The unemployment outlook remains good as some people consider 3% unemployment as full employment,” Zakariah said.

The research outfit hence does not see any need for Bank Negara to raise or cut interest rate.