Malaysia's economy may expand '4.8%' in 2013

Malaysia's economy is expected to expand 4.8 per cent in 2013, driven by investment and improving regional demand," according to Moody's Analytics.

In a commentary on Asia Spotlight, it said Malaysia's export-led economy slowed in the third quarter of this year.

It said fiscal austerity across Europe and a lackluster US recovery had had a negative spillover effect on global growth, weighing in on Malaysian exports.

On a year-ago basis, it said nominal exports contracted two per cent in the third quarter, following the second stanza's four per cent gain.

It said, partly offsetting weakness abroad, has been the robust domestic investment.

The government's drive to improve and develop infrastructure and a steady flow of foreign capital in the first half of the year have also been major catalysts.

This has also supported the broader economy, including the labour market, with a positive effect on household spending.

Monthly lending and production data suggests the domestic economy is still expanding.

High-frequency indicators suggest Malaysia's gross domestic product (GDP) expanded 4.9 per cent year-on-year in the third quarter, around the long-run trend rate.

The current drivers of growth are expected to persist.

The government’s plans to develop infrastructure and its recently announced handouts to civil servants and other incentives should buttress the domestic economy.

"At this stage we expect full-year growth in 2012 will print between 4.6 per cent and five per cent.

"Domestic demand is expected to remain robust, while China's recovery is expected to lift regional demand and with it, Malaysian exports," added Moody's.

Moody's Analytics is a division of Moody's Corporation that provides expertise in economic and consumer credit analysis, credit research and risk measurement, enterprise risk management and structured analytics and valuation.