Overall summary: I’ve always been extremely impressed with Malaysia’s economic history, and the economic growth they’ve achieved since the 1970’s. Today, I still have a lot of optimism for this country’s economy, which I believe to be very stable. My main concerns lay with how vulnerable Malaysia is to drops in global demand, which will constrain economic growth throughout 2011 and into 2012. Sectors such as manufacturing, construction are posting weak gains, some of which is due to a disruption in production stemming from the earthquake in japan earlier this year. The mining sector has also experienced a significant contraction in H1 of 2011, but is predicted to rebound in the later half. High house hold debt is also a major concern, but with an unemployment level of 3.2%, I’m optimistic that this can be managed and improved.
On the upside, we’re seeing very strong signs in consumer demand, which has increased by 6.6% in H1. Looking deeper into consumer sentiment and labor conditions, we’re also seeing positive signs. Malaysia’s massive service sector posted solid gains as well (6.4% in H1). Government investment projects are also going to be a boost to economic growth in H2 of 2011 and throughout 2012.
Statistics:
GDP (2011): 3.8%
GDP (2012): 3.4%
Points of concern:
- high household debt
- manufacturing sector weakening to decline in global demand (U.S/Eurozone) (1.8% growth in 2011)
- disruption in production due to japan earthquake (automobiles/electronics)
- Weak growth in construction (2.1%)
- Large contraction in mining sector (-6.6%)
Points of optimism:
- strong domestic consumption (6.6% increase in H1-2011)
- strong labor conditions
- positive consumer sentiment
- strong government consumption (approximately same increase as domestic consumption)
- strong growth in service sector (3/5 GDP) in h1-2011 (6.4% increase)
- Strong jobs market (unemployment at 3.2%)