Published: Wednesday August 29, 2012 MYT 2:42:00 PM
Updated: Wednesday August 29, 2012 MYT 7:11:54 PM
EIU mulls raising Malaysia GDP to above 4.7%
By John Loh
KUALA LUMPUR: The Economist Corporate Network, a unit of the UK-based Economist group, is considering raising its full year gross domestic product (GDP) growth forecast for Malaysia to above 4.7% following the country's robust economic performance in the second quarter and first half of the year.
Its chief economist for South and Southeast Asia Justin Wood said at a briefing on Wednesday that Malaysia was showing increasing resilience supported by strong domestic consumption and investment into fixed assets such as infrastructure, property and machinery.
On the overnight policy rate, he said it was likely to remain at 3% until the end of the year, after which inflation may edge up.
He cautioned, however, that Malaysia is vulnerable to the risk of capital flight as some 30% of its bond market is propped up by foreign capital, which is prone to leaving in the event of a risk-off environment.
Malaysia's GDP expanded at a faster pace of 5.4% in the three months to June, underpinned by the construction and manufacturing sectors, exceeding expectations of a 5% growth.
For the first half, the economy grew by 5.1% following a 4.8% expansion in the first quarter.