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Malaysia Economic Prognosis for 2014

Jan 29, 2014 | Valerie Wong

The Malaysian economy is actually doing pretty well. Current estimates from analysts expect the Southeast Asian contender to have a 5.5% (give or take a percentage point) growth rate for 2013, particularly by the estimation of the Head of Investment Strategy & Chief Economist of the AMP Capital, Shane Oliver. This 2014, it's expected that Malaysian GDP (Gross Domestic Product) growth will pick up steam from the 4.5% growth of last year. This rise should be further bolstered by the pick-up in worldwide economic growth and the momentary easing of 2013's monetary issues. As expected, as the whole Southeast Asian region recovers, everyone benefits.

As for the reports of Wales' Chief Economist and Centre for Economics and Business Research Ltd Executive Chairman (as well as the Institute of Chartered Accountants in England representative) Douglas McWilliams, he claims that the Malaysian economy should shine brighter in 2014 than it did in 2013 when everything is said and done. The reason behind this is because of exportation growth and the overall recovery of the global economy. The Eurozone is experiencing a rebound, while the U.S. is taking the steps to strengthen expansion, which means good news for Malaysia and the rest of the nations in the ASEAN nation.

The State of the Nation's Economy in 2014

Malaysia has the opportunity to enact societal and economic reforms now that there's bigger and stronger expansion in the United States of America. What this means is that whatever cultural or economic blockades that's keeping the nation from achieving its full economic potential can be changed now that the U.S.A. itself is offering significant positive influence in the global economy. As for the UOB or the United Overseas Bank, it expects Malaysia to grow to 5.2%, which is probably a more realistic but still optimistic take on the country's economic development. Malaysia is coming strong, mostly because of their exportation sector.

It's the higher rate of exports that's driving Malaysia towards a better and higher growth rate, and this comes at an opportune time now that global economies are recovering from their slump. In other words, Malaysia's concentration on better exportation wouldn't have had that big of an impact in 2014 if the rest of the world is still in recession and there are no other countries around to buy the quality exports that the Southeast Asian nation has lined up. According to Alvin Liew, UOB's Senior Economist, the implementation of government initiatives such as tax reforms, subsidy rationalization, and so forth in the country's 2014 budget should drive Malaysia to greater economic heights.

Malaysia Is On Tract to Becoming an ASEAN Vanguard

Malaysia is acting like a pioneer or an innovator with the way it's taking the right steps and going the right direction when it comes to stimulating its economy, as evidenced by its friendlier attitude toward taxation and improvements when it comes to subsidies. This should contain the 3.5% fiscal deficit while at the same time bringing higher revenues to the gross domestic product. In other words, they're giving the right incentives and the like to invest more in Malaysia in terms of high-quality exports found nowhere else. Then again, the country should tread tax reform with carefulness.

The road to tax reform is fraught with peril, such that it might create a bit of volatility and uncertainty down the pipeline. People tend to react to change unfavorably, but in terms of long-term growth, this is undoubtedly the right decision. It's a positive in terms of economic growth because the country will definitely benefit from reduced subsidies and good services tax that's fair to both the locals and the foreign investors. As long as the tax system is efficient as possible, any hard feelings between the foreign and domestic sector should be avoided.

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