Embargo Not for publication or broadcast before 1800 hours on Wednesday, 19 March 2014 Taklimat Laporan Tahunan 2013 dan Laporan Kestabilan Kewangan dan Sistem Pembayaran 2013 Gabenor Bank Negara Malaysia 19 Mac 2014 1
The Malaysian economy expanded by 4.7% in 2013 Contribution to growth (ppt) 4.8 -1.5 7.4 5.1 5.6 4.7 11.0 5.6% 9.0 7.0 5.0 3.0 1.0 -1.0 -3.0 -5.0 2008 2009 2010 2011 2012 2013p Private Investment Private Consumption Public Investment Public Consumption Net Exports Stocks GDP p preliminary Source: Department of Statistics, Malaysia and Bank Negara Malaysia 2
Key highlights in 2013 • Weaker global economic environment weighed on domestic growth • Robust domestic demand underpinned by strong investment and consumption activity • Low inflation of 2.1% • Resilient external position with current account surplus, low level of external debt and ample international reserves • Capital flows remained well-intermediated 3
L Global growth to improve in 2014 Annual change (%) 10.0 • Improvement in global growth 7.6 8.0 - Broader recovery in the advanced economies 6.1 - Sustained growth in the emerging economies Emerging economies 6.0 5.2 4.6 5.0 4.5 3.9 3.7 4.0 3.1 3.0 • Downside risks to growth remain 2.6 2.1 1.5 2.0 1.4 1.2 - Considerable fiscal uncertainties in the advanced economies 0.0 - Financial imbalances in both the advanced and Advanced economies the emerging economies -2.0 Global Growth - Risks from global monetary policy normalisation -4.0 2008 2009 2010 2011 2012 2013 2014f f forecast Note: Advanced economies include G7 economies, euro area, Australia, New Zealand and Israel Emerging economies include PR China, South Asia, Southeast Asia, other advanced Asian economies and other emerging economies Source: National authorities and IMF World Economic Outlook (January 2014 Update and October 2013) 4
Pace of recovery in the advanced economies to remain moderate due to structural constraints Growth remains below Weak labour market 2 High indebtedness 1 trend due to: conditions Real GDP of G3 Economies Domestic debt by sector, 2012 Unemployment rate % % 1Q 05 = 100 % of GDP 13 6 120 500 Euro area 450% 12 450 5.5 115 Government GDP trend line 77 11 400 Corporate 10 5 110 350 Household US 9 300 146 105 4.5 250% 8 250 248% 64 Japan 100 7 4 200 Real GDP (RHS) 80 150 6 96 95 3.5 52 228 100 5 50 90 90 91 4 3 4Q 00 4Q 02 4Q 04 4Q 06 4Q 08 4Q 10 4Q 12 4Q 07 4Q 08 4Q 09 4Q 10 4Q 11 4Q 12 4Q 13 0 US Euro area Japan Source: National authorities, Haver and IMF 5
Emerging economies: Contribution to global growth remains significant Contribution to global growth (ppt) 6 5 Global growth 4 Adv. Economies 3 Other EMEs 2 EM Asia 1 0 -1 -2 -3 2000 2002 2004 2006 2008 2010 2012 2014f f forecast Note: Advanced economies include G7 economies, euro area, Australia, New Zealand and Israel EM Asia includes PR China, South Asia, Southeast Asia and other advanced Asian economies Source: IMF World Economic Outlook (January 2014 Update and October 2013), BNM calculations 6
Asia: Sustained growth momentum Annual GDP growth change (%) 9 7.7 7.7 Growth performance in the region to be 8 7.5 supported by country-specific factors 7 6.5 6 5.2 5 5 • PR China: Continued rebalancing efforts 3.8 towards more sustainable growth 4 2.7 3 1.8 2 • Asia ex-China: Growth to benefit from 1 improvement in the exports sector 0 2012 2013 2014f 2012 2013 2014f 2012 2013 2014f PR China ASEAN-3 Other advanced Asian economies f forecast Note: ASEAN-3 refers to Indonesia, Philippines and Thailand Other advanced Asian economies refers to Korea, C. Taipei, Hong Kong SAR, Singapore Source: National authorities, IMF WEO October 2013, BNM estimates 7
Global inflation expected to remain moderate Commodity prices to remain broadly Low inflation in the advanced economies unchanged with contained price pressures in Asia Monthly index (Jan ’03 = 100) Annual change (%) 500 10 450 8 Crude 400 oil 6 350 300 4 Metals Asia 1 250 2 G3 2 200 Food 150 0 100 -2 50 0 -4 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Note: 1 Asia refers to PR China, Hong Kong SAR, Indonesia, Korea, Malaysia, Philippines, Singapore, Chinese Taipei and Thailand 2 G3 refers to US, euro area and Japan Sources: IMF, Haver and BNM estimates 8
Monetary policy remains accommodative The Fed reduced asset purchases in Divergent course of monetary policy January and February 2014 across Asia % of GDP Central bank balance sheet to GDP Rate (%) 50 Key interest rates (%) 10 45 BOJ 40 India 8 35 Indonesia ECB 30 6 PR China BOE 25 Fed 20 4 Philippines 15 Malaysia Korea 10 2 Thailand C. Taipei 5 0 0 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jan-09 Jan-10 Jan-11 Jul-11 Jan-12 Jan-13 Jan-14 Jul-09 Jul-10 Jul-12 Jul-13 Source: National authorities and BNM calculations 9
The Malaysian economy is on a steady growth trajectory of 4.5 − 5.5% in 2014 Annual change (%) 8 • Better performance of the 7 external sector 5.5% 6 5 • Domestic demand will 4.7% continue to anchor growth, 4 4.5% led by the private sector 3 2 • Broad-based expansion across 1 all economic sectors 0 -1 -2 2008 2009 2010 2011 2012 2013p 2014f p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 10
Improvement in external demand amidst a moderation in domestic demand 2013 p 2014 f Annual change (%) Domestic demand 1 7.6 6.9 Private sector 9.0 8.3 Consumption 7.6 6.9 Investment 13.6 12.6 Public Sector 3.7 2.9 Consumption 6.3 3.0 Investment 0.7 2.9 Net exports of goods & services -22.9 -10.3 Exports of goods & services -0.3 2.1 Imports of goods & services 1.9 3.1 Real GDP 4.7 4.5 - 5.5 p preliminary f forecast Note: 1 excluding stocks Source: Department of Statistics, Malaysia and Bank Negara Malaysia 11
L Private investment to remain robust… Real private investment Annual change (%) 25 21.9 Private investment to be 20 18.4 supported by: 13.6 13.6 15 • Improvement in external demand 12.6 10 10.5 • Commencement of new projects, 5 particularly in the services and Avg. (‘91-’13): 7.4% 5.1 0.1 manufacturing sectors 0 • Continued progress in existing -5 projects, including those in the mining sector -7.4 -10 2006 2007 2008 2009 2010 2011 2012 2013p 2014f p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 12
… and broad-based Investment approvals on an Capital spending to remain diverse upward trend across sectors Share to total Share to total private Approved Investments investment (%) investment (%) RM bil 100 100 Construction, 3% 220 Agriculture, 5% 216.5 200 Public Mining, (37%) 17% 80 80 180 160 167.8 154.6 Manufacturing, 140 60 60 27% 120 100 105.6 40 40 Private 80 (63%) Services, 60 Mining, 49% 20 20 40 17% 20 0 0 0 2010 2011 2012 2013 2014f 2014f f forecast Source: MIDA and BNM estimates 13
Private consumption to moderate to its long-term average Real private consumption Annual change (%) 12 Private consumption growth will 10.4 10 be supported by: 8.7 7.7 7.6 8 6.9 • Sustained income growth 6.8 6.9 6.6 6 • Steady employment conditions Avg. (‘90-’13): 6.6% 4 2 0.6 0 2006 2007 2008 2009 2010 2011 2012 2013p 2014f p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 14
Favourable labour market conditions to support consumption Stable employment conditions and Employment to be supported by both sustained wage growth export and domestic-oriented sectors Annual change/ Persons (mil) Persons (mil) rate (%) 16 8 Employment Unemployment rate (RHS) 10 Wage growth (RHS) 2012 2013p 2014f 7 9 15 8 6.0 6.6 5.6 6 7 5 14 6 4 5 13 4 3 3.1 3.1 3 3.0 2 12 2 1 1 0 11 0 Export-oriented Domestic-oriented 2012 2013p 2014 f p preliminary f forecast Source: Department of Statistics Malaysia, MEF Salary Survey, Bank Negara Malaysia 15
Higher growth amid continued expansion in all economic sectors • Services and manufacturing 2013 p 2014 f % share of sectors GDP Annual change (%) (2013) - Benefit from improvement in the global economy amidst growth in Services 55.2 5.9 6.2 domestic demand Manufacturing 24.5 3.4 3.5 • Commodity sector - Driven by higher production of Mining 8.1 0.5 1.6 natural gas, crude oil and palm oil 7.1 2.1 3.8 Agriculture • Construction sector 3.7 10.9 10.0 Construction - Growth across residential and commercial property and civil Real GDP 100.0 4.7 4.5 - 5.5 engineering projects p preliminary f forecast Source: Department of Statistics, Malaysia and Bank Negara Malaysia 16
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