Economic Growth of Malaysia

Topics: Economics, Macroeconomics, National accounts Pages: 4 (1360 words) Published: October 31, 2010
%-6% growth seen next year

Private sector takes over as growth driver
THE Malaysian economy is projected to grow by between 5% and 6% in 2011, spurred by domestic demand as the private sector takes over as the driver of growth. Private investment activity, which turned positive in 2010, is envisaged to contribute significantly to economic growth. The idea of the private sector leading growth stems from the start of 52 private finance initiatives (PFI) over the 10th Malaysia Plan (10MP) period as well as the implementation of private sector projects under the National Key Economic Areas (NKEAs). Domestic demand is expected to grow by 5.8% in 2011 compared with 6.9% in 2010 which would be supported by greater dynamism of the private sector with expenditure accelerating by 7%. With various measures taken to enhance competitiveness and productivity, growth will be driven by private investment which is seen to be expanding by 10.2% in 2011 compared with 15.2% in 2010. Aiding growth in private investment would also be public-private partnerships as well as the RM20bil Facilitation Fund under the 10MP. Low unemployment and growth in household income are expected to boost private consumption, while higher commodity prices, which the country is relying more on these days, would spur rural household spending next year. .

Private consumption is expected to grow by 6.3% in 2011 from 6.7% last year. As the private sector activity ramps up, the public sector expenditure is expected to moderate, which is in line with the policy of slowly cutting back the fiscal deficit. Public expenditure is expected to grow at a slower pace of 2.8% from 3.8% in 2010. Public investment is anticipated to expand slightly by 0.6% from 8.3% in 2010 and public consumption by 4.6% from 0.2% in 2010. Positive contribution to the economy is also anticipated from the supply side of the economy as all sectors of the economy is projected to show growth with the services sector remaining as the...
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