Malaysia Economic Monitor, June 2013

Following a strong performance in 2012, Malaysia's economy hit a soft patch in the first quarter of 2013. Economic growth has been supported by the strong, broad-based performance of domestic consumption and investment from public and private sources. The acceleration of investment growth has been a key feature of the recent growth trend. Public and private consumption has also underpinned growth. Accommodative fiscal and monetary policies have supported both higher (real) household incomes and sustained credit growth, which along with firm labor markets provided a solid backdrop for consumption growth even as agricultural commodity prices declined. Despite significant expenditure overruns, the government met its fiscal deficit target for 2012. Supply-side factors kept inflation subdued amidst robust domestic demand. Monetary authorities emphasized macro-prudential regulation as the policy interest rate continued to be pulled in two directions. Malaysia is likely to continue posting solid growth rates in 2013 and 2014. Growth in 2013 is projected to come at 5.1 percent, supported by the strong momentum in investment growth, still-accommodative fiscal and monetary policies, higher household income due to tight labor markets, and modest improvement in the export sector. The sustainability of Malaysia's favorable near-term prospects into 2015 and beyond continues to hinge on the implementation of structural reforms. Having a rigorous investigation of the effectiveness of various tax incentives across different industries, and comparing the benefits with the costs in foregone revenues, will provide important lessons, to Malaysia and other countries, of the appropriate role for fiscal incentives in horizontal diversification.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2013-06
Subjects:	ADVANCED ECONOMIES, AGRICULTURE, ASSET PRICE, ASSETS, BANKING SECTOR, BANKING SYSTEM, BENCHMARK, BENCHMARK INTEREST RATE, BENEFIT ANALYSIS, BILLS, BONDS, BUFFER, BUFFERS, CAPITAL ACCUMULATION, CAPITAL FLOWS, CAPITAL GOODS, CAPITAL GOODS IMPORTS, CAPITAL INFLOWS, CAPITAL MARKETS, CAPITAL OUTFLOWS, CARBON, CARBON EMISSIONS, CENTRAL BANK, CENTRAL BANKS, CLIMATE CHANGE, COMMODITY PRICES, COMPARATIVE ADVANTAGE, COMPETITIVENESS, CONSOLIDATION, CONSUMER DEMAND, CONSUMER PRICE INDEX, CONSUMER PRICE INFLATION, CONSUMPTION EXPENDITURE, CONSUMPTION GROWTH, CORPORATE INCOME TAXES, CPI, CURRENCY, CURRENCY ASSETS, CURRENCY SWAPS, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT SURPLUS, DEBT, DECLINE IN INFLATION, DEFICITS, DEFORESTATION, DEPOSITS, DEPRECIATION, DEVELOPMENT ECONOMICS, DIRECT INVESTMENTS, DOMESTIC CONSUMPTION, DOMESTIC CURRENCY, DOMESTIC DEMAND, DOMESTIC DEMAND GROWTH, DRAG ON GROWTH, DUTCH DISEASE, ECONOMIC ACTIVITY, ECONOMIC CONDITIONS, ECONOMIC COOPERATION, ECONOMIC DEVELOPMENT, ECONOMIC ENVIRONMENT, ECONOMIC GROWTH, ECONOMIC MODEL, ECONOMIC OUTLOOK, ECONOMIC PERFORMANCE, ECONOMIC POLICY, ECONOMIC RESEARCH, ELECTRICITY GENERATION, ENERGY CONSUMPTION, ENERGY DEMAND, ENVIRONMENTAL, ENVIRONMENTAL CONSERVATION, ENVIRONMENTAL MANAGEMENT, EQUITY MARKET, ERROR CORRECTION MODEL, EXCESS CAPACITY, EXCHANGE RATES, EXPENDITURES, EXPORT EARNINGS, EXPORT GROWTH, EXPORT MARKETS, EXPORT PERFORMANCE, EXPORT VOLUMES, EXPORTER, EXPORTS, EXTERNAL DEMAND, EXTERNAL FACTORS, EXTERNAL SHOCK, EXTERNAL SHOCKS, FEDERAL RESERVE, FINANCIAL CRISIS, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL STABILITY, FISCAL DEFICIT, FISCAL POLICY, FISCAL POSITION, FISHING, FIXED CAPITAL, FOOD PRICES, FORECASTS, FOREIGN ASSETS, FOREIGN CURRENCIES, FOREIGN CURRENCY, FOREIGN CURRENCY ASSETS, FOREIGN DIRECT INVESTMENT, FOREIGN EXCHANGE, FOREIGN INVESTMENT, FORESTRY, FREE TRADE, FREE TRADE AREA, GDP, GLOBAL DEMAND, GLOBAL ECONOMY, GLOBAL LIQUIDITY, GNP, GROSS DOMESTIC PRODUCT, GROSS FIXED CAPITAL FORMATION, GROSS NATIONAL INCOME, GROSS NATIONAL PRODUCT, GROWTH RATE, GROWTH RATES, HIGH-INCOME COUNTRIES, HOLDINGS, IMBALANCES, IMPORT, IMPORT DEMAND, IMPORTS, INCOME, INCOME GROWTH, INDUSTRIALIZATION, INFLATION, INFLATION RATE, INFLATION RATES, INTEREST RATE, INTERNATIONAL FINANCE, INTERNATIONAL RESERVES, INTERNATIONAL SETTLEMENTS, INTERNATIONAL TRADE, INVENTORIES, INVESTMENT BANKING, INVESTMENT BOOM, LABOR COSTS, LABOR FORCE, LABOR MARKET, LABOR MARKETS, LAND USE, LIQUIDITY, LIQUIDITY CONDITIONS, LIQUIDITY MANAGEMENT, LOOSE MONETARY POLICY, LOSS OF COMPETITIVENESS, LOW INTEREST RATES, M3, MACROECONOMIC MANAGEMENT, MACROECONOMIC STABILITY, METALS, MONETARY AUTHORITIES, MONETARY POLICIES, MONETARY POLICY, MONETARY TRANSACTIONS, NATIONAL INCOME, NATURAL CAPITAL, NATURAL RESOURCE, NATURAL RESOURCES, NET EXPORTS, NOMINAL EXCHANGE RATE, OIL, OIL PRICES, OIL REVENUES, OIL SECTOR, OPEC, OPEN ECONOMY, OUTPUT GAP, PERMANENT INCOME, PRICE CONTROLS, PRIMARY COMMODITIES, PRIVATE CONSUMPTION, PRODUCERS, PUBLIC INVESTMENT, PUBLIC INVESTMENTS, PURCHASING POWER, PURCHASING POWER PARITY, RE-EXPORTS, REAL APPRECIATION, REAL EFFECTIVE EXCHANGE RATE, REAL EFFECTIVE EXCHANGE RATES, REAL EXCHANGE RATE, REAL GDP, REAL GROSS DOMESTIC PRODUCT, REAL WAGE GROWTH, RECESSION, RECYCLING, REDUCING EMISSIONS, RESOURCE MANAGEMENT, REVENUE RECYCLING, RISK AVERSION, SECURITIES, SHORT-TERM EXTERNAL DEBT, SLOWDOWN, SLOWDOWNS, SPARE CAPACITY, STRUCTURAL REFORM, STRUCTURAL REFORMS, SUPPLY SIDE, SUPPLY-SIDE, SURPLUS, TAX, TAX REVENUES, TERMS OF TRADE, TIMBER, TOTAL EXPORTS, TOTAL IMPORTS, TRADE ACCOUNTS, TRADE BALANCE, TRADE GROWTH, TRADE PATTERNS, TRADING PARTNERS, UNCERTAINTIES, UNCERTAINTY, UNEMPLOYMENT, UNEMPLOYMENT RATE, VALUATION, WAGES, WEALTH, WORLD PRICES, WORLD TRADE,
Online Access:	http://documents.worldbank.org/curated/en/2013/06/17957688/malaysia-economic-monitor-harnessing-natural-resources https://hdl.handle.net/10986/16529
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