The Malaysian economy is expected to expand at an average annual rate of 5.5 per cent from next year until 2016, said Justin Wood, chief economist of the Economist Corporate Network.
He said Malaysia’s performance was surprisingly strong in the first half of 2012, with gross domestic product (GDP) growing at a phenomenal 5.4 per cent in the second quarter, defeating previous forecasts.
Wood also said the Economist Corporate Network is now performing due diligence to revise upwards the full year GDP growth projection from an initial target of 4.7 per cent.
He said the growth clearly indicated that the Malaysian economy, together with the rise of other economies in the Asean region, is getting resilient by its own to buffer the external financial uncertainties.
“The resilience stems both from a change in the character of Malaysia’s export profile, and from a robust domestic economy,” Wood told a media briefing here today.
He said Malaysia’s consumers are spending, and the most important of all, domestic investment into fixed assets including infrastructure, property and machinery, is picking up after many years of lacklustre activity.
Investment, he said, was coming from both the government and the private sector, which includes domestic as well as foreign investors.
“The perception of Malaysia among foreign investors has improved recently. Partly, this reflects a changing view of the relative attractiveness of other investment opportunities in Asia.
“But, partly, it also reflects changes in Malaysia itself, especially the ongoing reforms under the government Transformation Programme and Economic Transformation Programme,” Wood said.
He said the Asia Business Outlook Survey 2012 by Economist Corporate Network, which involved 500 multinationals, indicated that 50 per cent of the respondents would increase their investments in Malaysia, while the remaining 50 per cent is seeking to keep their current investments.
“This is a very positive outlook given that many companies are now afraid to increase their overseas investment, but in Malaysia’s case, 50 per cent of the respondents wanted to increase (their investments),” he said.
Meanwhile, Wood said in the same survey, Malaysia was ranked fourth after Indonesia, Vietnam and India in the list of Asian countries that are becoming more vibrant in attracting production and manufacturing investments.
He said the Economist Corporate Network expected Malaysia’s foreign direct investment (FDI) ratio to climb steadily to 26 per cent of GDP by 2016.
Currently, the ratio is somewhere between 21 and 22 per cent of the economy, he added.
On currency, Wood said the ringgit is expected to appreciate against the US dollar to average at RM3.07 this year and to RM3 next year.