Taklimat Laporan Tahunan 2010 dan Laporan Kestabilan Kewangan dan Sistem Pembayaran 2010 Gabenor Bank Negara Malaysia 23 Mac 2011 1
Challenge for global economy going into 2011 is sustaining growth with job creation Global growth projection for 2011 2009 2010 2011 f • Significant improvement in 2010 Annual change (%) World GDP -0.6 5.0 4.4 • Continued recovery in advanced economies although growth remains World Trade -10.7 12.0 7.1 slow US -2.6 2.8 3.0 • Strong growth in emerging economies, Euro area -4.1 1.7 1.5 particularly in Asia underpinned by domestic demand and recovery in Japan -6.3 3.9 1.6 world trade Developing Asia 1/ 7.0 9.3 8.4 • More recently, rising commodity and China 9.2 10.3 9.6 energy prices are leading to higher ASEAN-5 2/ 1.7 6.7 5.5 global inflation Note: Forecasts for 2011 are IMF’s projections 1/ IMF: Asia ex-NIEs 2/ IMF: Indonesia, Malaysia, Philippines, Thailand and Vietnam Source: National authorities, IMF World Economic Outlook, January 2011 Update 2
Global growth mainly from EMEs in 2011 While accounting for 47% of global economy, emerging economies expected to contribute more than 70% of global growth Contribution to world growth, p.p. share of world growth. % Advanced economies EM: Africa 8 160 EM: Asia EM: Eastern Europe 7 140 EM: Middle East EM: Latin America 6 120 EM: CIS EME contribution to global growth (RHS) 5 100 4 80 3 60 2 40 1 20 0 0 -1 -20 -2 -40 -3 -60 -4 -80 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011f Source: IMF World Economic Outlook Note: CIS is the Commonwealth of Independent States, formerly Soviet republics 3
Advanced economies still need to address structural problems High fiscal deficit 3 High unemployment rate 2 Restrained credit conditions 1 % Credit to private sector, growth % of GDP % of GDP % % % 15 6 -14 -12 Fiscal deficit, % of GDP Unemployment rate (%) 11 6 5 -12 -10 4 10 5 -10 9 3 -8 4 -8 5 2 -6 -6 1 7 3 0 0 -4 -4 2 -1 -2 5 -5 -2 1 -2 0 -3 3 0 2 0 -10 -4 Mar-08 Jun-08 Mar-09 Jun-09 Mar-10 Jun-10 Dec-07 Sep-08 Dec-08 Sep-09 Dec-09 Sep-10 Dec-10 Mar-08 Jun-08 Mar-09 Jun-09 Mar-10 Jun-10 Dec-07 Sep-08 Dec-08 Sep-09 Dec-09 Sep-10 Dec-10 2001 2003 2005 2007 2009 US Euro area UK Japan (RHS) Source: National authorities, Haver, IMF 4
Regional economies supported by resilient domestic demand Unemployment trending down Rising retail sales Continued access to credit 1 2 3 Unemployment rate yoy,% Retail sales yoy,% Lending growth * yoy,% yoy,% 50 25 40 16 6 Index 7 Index 40 20 6 12 5 30 30 15 5 4 8 20 10 20 4 10 5 3 4 3 0 0 10 2 0 2 -10 -5 0 1 -4 -20 -10 1 -30 -15 0 0 -10 -8 Aug-08 Aug-09 Aug-10 Dec-07 Apr-08 Dec-08 Apr-09 Dec-09 Apr-10 Dec-10 Jun-08 Jun-09 Jun-10 Jun-08 Jun-09 Jun-10 Dec-07 Mar-08 Sep-08 Dec-08 Mar-09 Sep-09 Dec-09 Mar-10 Sep-10 Dec-10 Dec-07 Mar-08 Sep-08 Dec-08 Mar-09 Sep-09 Dec-09 Mar-10 Sep-10 Dec-10 Indonesia Korea Singapore Hong Kong China C. Taipei (RHS) Thailand (RHS) Note: * Refers to loans as reported in banks’ balance sheet, except for Indonesia which refers to loans outstanding Source: National authorities, Haver 5
Rising commodity prices have increased the risk to higher global inflation Rising commodity prices amid supply …driving up inflation in most economies disruptions and geopolitical tensions… Index (Jan ’03 = 100) Yoy (%) 8 500 Metals 7 450 6 400 East Asia-9 5 350 4 UK 300 3 Euro 250 Crude oil 2 US 200 1 Food 150 0 100 -1 -2 50 -3 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 6
Different degrees of monetary policy response Some advanced economies are expected …while most regional economies have to begin to normalise rates this year… started to normalise or tighten since 2010 % % Key interest rates, % Key interest rates, % 10 6 5 8 Indonesia 4 PR China 6 3 4 Malaysia 2 Korea Euro area 2 Thailand 1 UK Ch Taipei Japan 0 0 US 2008 2009 2010 2011 2008 2009 2010 2011 7
Global shifts in liquidity: Volatile capital flows… Large capital inflows driven by growth …driving stock and property prices higher differentials and the search for yield… Stock market and property price performance Total flows into equity and bond markets Indonesia PR China Thailand Indonesia Philippines Korea C. Taipei Philippines Singapore Korea Malaysia Singapore India Malaysia 1 2009 Stock market Thailand 2010 P.R China Property prices C. Taipei Hong Kong 0 4 8 12 16 20 0 50 100 150 200 USD billion % change from end-2008 till end-2010 Source: EFPR Source: Haver and Bloomberg 1/ till 3Q 10 for property prices 8
Several countries have implemented measures to manage the consequences of these flows Measures introduced in the region to manage capital flows PR China Korea Chinese Taipei Thailand Administrative measures (real estate) Indonesia Greater flexibility for capital outflows (liberalisation) Hong Kong SAR & Singapore Prudential & liquidity measures (macroprudential) Philippines Limit capital inflows – capital account measures 9
The Malaysian economy is projected to grow by 5% − 6% in 2011 Annual change (%) • Slower growth in 1H 2011 8 – High base in 1H 2010, particularly 7.2% 7 6.0% for exports and investment 6 – Lower demand for electronic 5 exports 5.0% 4 3 • Growth is expected to improve in 2H 2 – Stronger expansion of domestic 1 demand, particularly, private consumption and investment 0 -1 – Higher exports -2 2010p 2005 2006 2007 2008 2009 2011f p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 10
Strong growth in domestic demand to be driven by private sector activity 2010 p 2011 f 2010 p 2011 f • Private domestic Annual change Contribution to demand to be the main (%) growth (p.p) growth driver Domestic demand 6.3 6.7 5.6 6.0 - Strong private consumption Private sector 7.8 7.4 4.9 4.7 - Rising investment Consumption 6.6 6.9 3.6 3.7 activity Investment 13.8 9.7 1.4 1.0 Public sector 2.5 5.1 0.6 1.3 • Public sector to remain supportive of growth Consumption 0.1 7.2 0.0 1.0 Investment 5.5 2.7 0.6 0.3 Net exports -24.2 2.3 -3.3 0.2 Exports of G&S 9.8 2.7 10.5 3.0 Imports of G&S 14.7 2.8 13.8 2.8 Real GDP 7.2 5.0~6.0 7.2 5.0~6.0 p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 11
Strong expansion in private consumption Real private consumption Stronger expansion in consumer Annual change (%) spending supported by: 12 10.5 – Favourable labour market 10 conditions 9.1 8.5 8 – Rising disposable incomes 6.6 6.9 6.8 – Sustained consumer confidence 6 – Continued access to credit 4 2 0.7 0 2005 2006 2007 2008 2009 2010p 2011f p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 12
Strong performance in private investment 2010 p 2011 f Annual change (%) 2009 • Increased capital spending in all economic sectors Real private investment -17.2 13.8 9.7 - Key sectors: services, manufacturing and mining Nominal Private Investment RM billion 86.9 90 79.8 76.6 76.9 80 • Factors supporting private 65.2 70 investment: 62.1 60 - Expansion of new growth areas 50 - Strengthening domestic demand 40 30 - Implementation of Government 20 initiatives 10 - Sustained business confidence 0 2006 2007 2008 2009 2010p 2011f Agriculture Mining Manufacturing Construction Services p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 13
FDI to increase further in 2011 Net FDI inflows into Malaysia RM billion • Higher net inflows of FDI in 2011 50 - Better corporate earnings - Rising business confidence 40 32.4 - Further improvement in global 29.5 27.6 FDI flows 30 24.1 - Liberalisation 20 - Implementation of Government ETP projects 10 5.0 0 • Inflows channeled mainly into the 2007 2008 2009 2010p 2011f manufacturing, services, and oil and gas sectors p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 14
Broad-based growth across all sectors • Supported mainly by 2010 p 2011 f Annual change (%) the continued growth of domestic economic activity Agriculture 1.7 3.4 • Trade-related services Mining 0.2 2.0 and export-oriented manufacturing Manufacturing 11.4 5.7 industries to record slower growth in line Construction 5.2 5.4 with the expected moderation in external Services 6.8 5.9 demand Real GDP 7.2 5.0 ~ 6.0 p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 15
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