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Malaysia's economy to grow 5.5% in 2013: CIMB

The economy is expected to grow by 5.5% next year on the back of domestic demand, which is expected to remain resilient despite weaker exports due to weaker global demand, said CIMB Investment Bank Bhd regional head of economics Lee Heng Guie. Opulentus Malaysia"For 2012 we are confident the country's gross domestic product will expand by 5%, after growing 5.1% in the first half. Next year will be challenging, but we'll wait (to see what's in store) for Budget 2013 which will be announced on Friday," he told reporters after a luncheon talk on Asia: Domestic Strength, External Challenges at the CIMB Asean SME Forum 2012 today. "We expect (projects under) the Economic Transformation Programme to speed up and already, we have seen quite a strong private investment growth in the first half of this year. Private investment grew about 22.4% in the first half, largely underpinned by investment in the oil and gas industry and some of the ongoing projects under the 10th Malaysia Plan," he said. Lee also expects food inflation to rear its ugly head again as prices across the region are "stubbornly high" despite some easing in headline inflation. "Continuous increase in food prices will eat into household budgets in Asia as a large portion of these budgets are spent on food, between 14% and 33%." "There are three things to watch out for if food inflation comes back: It will raise inflation, hamper consumption and limit the ability of central bank to ease interest rate. It's quite a difficult balancing act. Assuming inflation is coming back and that next year will still be quite challenging, the central bank will have to strike a balance between keeping an eye on inflation and wanting to sustain growth momentum," he added. On exports, Lee said the slowdown in China will affect Malaysia as the former accounts for 13% of our country's exports. "If China sneezes, the Asian economy will catch a cold given the significant high proportion of export share to China. We are seeing the impact of China's slowdown on the export growth of some of the countries. However, China will still be growing at quite a decent pace. We're looking at a growth of 7.8% this year and between 8% and 8.3% for 2013," he said. Source: The Sun Daily

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