Economist Intelligence Unit on Malaysia
Access Malaysia Today has an overview of The Economist Intelligence Unit’s Forecast on Malaysia. The forecast worries about increased political instability and reports mixed economic news:
There have been two downgrades - in the political stability and legal and regulatory risk categories - in the latest review of Malaysia’s operational risk model.
The fate of Anwar Ibrahim, the leader of the opposition party, Pakatan Rakyat, could spark large-scale social unrest in Kuala Lumpur, the capital, which could spread to other major cities on peninsular Malaysia.
[. . .]
As a result, we have increased the political stability risk score by five points, from 35 to 40.
The economic news is mixed:
There have been opposing movements in the underlying indicators of the macroeconomic risk category. As a result, the category score remains the same, at 15.
On the one hand, real GDP is expected to slow to 3.1% in 2009, as economic growth in Malaysia’s major export markets slows significantly in that year. Growth is expected to remain sluggish in 2010. On the other hand, the government has been cutting the administered price of fuel in recent months and is expected to continue this trend over the short term as international oil prices continue to fall.
Weak domestic demand coupled with persistent falls in the price of commodities, non-commodities and industrial raw materials will exert downward pressure on overall consumer prices. We expect consumer price inflation to average 2.4% in 2009.
As was noted yesterday, the government is attempting to balance stability with liberalization. Finding the right mix will be critical.
