World Economic outlook - malaysia economic growth forecast 2012 : Malaysia's economy is expected to slow further the rest of the year and in 2012 on the dim global economic outlook triggered by the deepening Eurozone debt crisis, according to World Bank (WB) on Monday.
In its fifth issue of "Malaysia Economic Monitor" released on Monday, World Bank forecast Malaysia's economy to grow at 4.3 percent for 2011 and 4.9 percent for 2012.
The Malaysian government predicted an economic growth of five to six percent for the year.
"Domestic demand is expected to remain resilient but the weakening global environment is likely to put pressure on manufacturing wages and agricultural commodity prices, which could dampen consumer spending," the WB said.
"Between domestic strength and global weakness, the weak global outlook prevails," it added.
Malaysia recorded a 5.8 percent Gross Domestic Product (GDP) growth in its third quarter ending September, after expanding 4.3 percent in the second quarter.
Real GDP for the first half of the year expanded 4.4 percent year-on-year.
Investments and exports led by commodities and non-electronics manufactured products contributed to the growth.
World Bank forecast exports to slow while domestic consumption and private investment would support growth through 2012 as projects under an economic transformation blueprint and a five- year development plan start to kick in.
"We are looking at consolidation of the fiscal deficit next year. Public spending should be less of a contributor to growth next year as part of an economic model that growth has to be more private sector driven," WB's lead economist and author of the report, Frederico Gil Sander told Xinhua in an interview.
"So what we are looking for is some kind of implementation of the strategic initiatives and the continue implementation of some of these projects under the Economic Transformation Program, that would give more momentum to growth next year more solid than the government side," he added.
China would be a linchpin for growth in the Malaysian the region's economy due to its demand for consumer imports, which would help stabilize commodity prices.
Commodity accounts for about 40 percent of Malaysia's exports.
"More and more there is a growth in the domestic demand for consumer imports. A lot of exports from the region to China are staying in China as opposed to just being in a reprocessing trade which still ultimately depends on exports from China to the advanced economies,"Gil Sander said.
"China has a big demand for commodities for developments so they will tend to keep the prices stable. Malaysia still expect China to be growing fairly robustly next year, we don't expect commodity prices to come down very much even though we have all these weaknesses in the economy,"he added.
World Bank projected Malaysia's headline inflation to be at around 3.2 percent in 2011 and soften to 2.7 percent in 2012.
It said Malaysia should speed up the execution of transformation plans it announced last year to weather the continued volatility in the external environment.
The plansthe Government Transformation Programme and the Economic Transformation Programme were aimed at improving government service efficiency and turning the country into a high income economy by 2020.
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