(FRQRPLF 3HUIRUPDQFHDQG 3URVSHFWV Chapter 3.indd 47 9/30/11 4:42:27 AM 48 Chapter 3.indd 48 9/30/11 4:42:27 AM Economic Performance and Prospects Overview by the Government such as tax incentives and liberalisation measures to attract investment, Economy continues to expand particularly in the oil and gas as well as services sectors. Public expenditure is envisaged to remain he Malaysian economy continued to expand supportive of economic activities with expansion Tdespite the more challenging external in capital spending by the Non-Financial Public environment. Real Gross Domestic Product Enterprises (NFPEs). (GDP) registered a growth of 4.4% during the first half of 2011. The moderation was On the supply side, all sectors are expected due to slowing exports following the weaker- to post positive growth, except mining due than-expected United States (US) economic to lower production of crude oil. In tandem performance, deepening euro sovereign debt with robust private consumption, the services crisis, global supply chain disruptions resulting sector is envisaged to grow strongly led by from earthquake and tsunami in Japan as well the wholesale and retail trade, finance and as rising global inflation. The moderation was insurance, real estate and business services as also partly attributed to the high-base effect well as communication sub-sectors. Despite the as GDP grew at a strong pace of 9.5% during contraction in output of electrical and electronics Economic Performance and the same period in 2010. However, the growth (E&E) and transport equipment in the first half momentum is expected to pick up in the second of 2011, the manufacturing sector is expected to half of the year on the back of resilient private record positive growth supported by strong output Prospects consumption and strong private investment. of construction-related materials and resource- Growth will also be supported by the acceleration based industries. Meanwhile, the agriculture of public infrastructure projects and sustained sector, which contracted in the first quarter of strong exports of commodities and resource- 2011, is expected to expand in the second half based manufactured goods. Against this backdrop, of 2011 driven by higher output of palm oil and the Malaysian economy is projected to grow rubber as well as food commodities. Growth in 5% – 5.5% in 2011 (2010: 7.2%). the construction sector will be underpinned by higher construction activities in the residential On the demand side, growth will be supported segment and acceleration of public civil engineering by sustained consumer spending reinforced projects in the second half of the year. by strong investment activities. Consumer spending is expected to post a strong growth The balance of payments (BOP) is expected backed by increasing household income and to remain strong in 2011, with a larger current stable employment conditions. Sustained high account surplus at RM89.3 billion or 10.9% of agriculture commodity prices will also support Gross National Income (GNI) supported by a rural household expenditure. Meanwhile, private surplus in the goods account. The trade surplus investment is envisaged to strengthen further is anticipated to remain large, backed by higher boosted by business opportunities from the exports and firm commodity prices although implementation of the Economic Transformation imports will continue to increase in line with strong Programme (ETP) initiatives and continuous domestic consumption and investment activity. In investment in the technology-related, services the financial account, the steady inflows of FDI and resource-based industries. Strong inflows of are expected to continue, reflecting investors’ foreign direct investment (FDI) in the first half of confidence in the strong fundamentals of the 2011 (RM21.2 billion) are expected to continue Malaysian economy as well as the Government’s with the implementation of several key initiatives economic transformation initiatives. 49 Chapter 3.indd 49 9/30/11 4:42:27 AM TABLE 3.1 Gross Domestic Product (GDP) by Sector 2010 – 2012 (at constant 2000 prices) Contribution to Change Share of GDP GDP growth (%) (%) (percentage point) 2010 20111 20122 2010 20111 20122 2010 20111 20122 Agriculture 2.1 4.7 4.1 7.3 7.3 7.2 0.2 0.3 0.3 Mining 0.2 -2.4 2.5 7.0 6.5 6.3 0.0 -0.2 0.2 Manufacturing 11.4 4.5 4.5 27.6 27.5 27.2 3.0 1.3 1.2 Construction 5.1 3.4 7.0 3.3 3.2 3.2 0.2 0.1 0.2 Services 6.8 6.4 6.5 57.7 58.4 58.9 3.9 3.7 3.8 Less: Undistributed FISIM3 5.8 6.4 6.2 4.1 4.2 4.2 0.2 0.3 0.3 Add: Import duties 9.6 13.2 1.6 1.3 1.4 1.3 0.1 0.2 0.0 GDP 7.2 5.0–5.5 5.0–6.0 100.0 100.0 100.0 7.2 5.0–5.5 5.0–6.0 1 Estimate. 2 Forecast. 3 Financial Intermediation Services Indirectly Measured (FISIM). Note: Total may not add up due to rounding. Source: Department of Statistics and Ministry of Finance, Malaysia. Prospects In tandem with the expansion of economic activities Plan (10MP) and ETP initiatives also contributed in 2011, national income as measured by the to the favourable performance of the sector. Economic Performance and GNI is estimated to expand 10.9% to RM820.2 With these developments, the sector is expected billion with per capita income rising 9.7% to to increase 6.4% and remain the key driver of RM28,725 (2010: 11.1%; RM739.5 billion; 9.7%; growth, accounting for 58.4% of GDP in 2011 RM26,175). Consequently, nominal per capita (2010: 6.8%; 57.7%). The intermediate services income in terms of purchasing power parity (PPP) group is envisaged to grow 6.5% (2010: 7.2%) is envisaged to increase 17.1% to USD16,529 supported by the finance and insurance as in 2011 (2010: 5.2%; USD14,110). well as real estate and business services sub- sectors. Meanwhile, the final services group is anticipated to expand 6% (2010: 6.8%) driven Sectoral Performance by the wholesale and retail trade as well as accommodation and restaurant sub-sectors. Services Sector The wholesale and retail trade sub-sector grew Services sector drives growth 7.1% (January – June 2010: 9.2%) supported by strong consumer spending amid favourable In the first half of 2011, the services sector labour market conditions and sustained disposable grew 6.4% (January – June 2010: 8%) supported income. This was reflected in the higher distributive by sturdy domestic consumption and investment trade index which increased 15.9% to 151.3 activity. The implementation of the Tenth Malaysia points (January – June 2010: 13.4%; 130.5 50 Chapter 3.indd 50 9/30/11 4:42:28 AM TABLE 3.2 Services Sector Performance 2010 – 2012 (at constant 2000 prices) Change Share of GDP (%) (%) 2010 20111 20122 2010 20111 20122 Intermediate services Transport and storage 6.9 5.1 6.7 3.8 3.8 3.8 Communication 8.5 7.9 7.9 4.2 4.4 4.5 Finance and insurance 6.4 6.3 6.8 11.7 11.8 12.0 Real estate and business services 7.8 6.8 5.7 5.5 5.6 5.6 Final services Utilities (electricity, water and gas) 8.2 3.1 4.8 3.0 3.0 2.9 Wholesale and retail trade 8.0 7.4 6.9 13.6 13.9 14.1 Accommodation and restaurant 5.0 6.0 6.9 2.4 2.5 2.5 Other services 4.0 4.4 5.7 5.9 5.8 5.8 Government services 5.8 7.6 5.6 7.5 7.7 7.7 Total 6.8 6.4 6.5 57.7 58.4 58.9 Economic Performance and 1 Estimate. 2 Forecast. Note: Total may not add up due to rounding. Prospects Source: Department of Statistics and Ministry of Finance, Malaysia. points), with wholesale and retail trade indices hypermarkets, superstores and departmental increasing 19.2% and 7.8% (January – June stores (end-August 2010: 148) were operating 2010: 13.8%; 10.3%), respectively. During the in Malaysia. Meanwhile, the Government has first seven months of 2011, other consumption introduced the Retail Shop Transformation indicators such as imports of consumption goods (TUKAR) programme. Under the programme, and credit card spending increased 12.8% and selected large format retailers will assist small 11.8% (January – July 2010: 13.4%; 15.9%), retailers to improve their premises and layout respectively. However, sales of motor vehicles which include attractive product display shelves, declined 3% (January – July 2010: 16.2%) on enhanced lighting and point-of-sales system to account of supply chain disruptions following manage product inventory. As at end-August the devastating March earthquake and tsunami 2011, a total of 258 shops have been modernised in Japan. under TUKAR programme, while the remaining 242 shops are expected to be completed by Growth of the sub-sector is anticipated to year-end. To ease the burden of the rakyat in remain encouraging with ongoing efforts by the urban areas, the Government has launched Government to increase its contribution to the Kedai Rakyat 1Malaysia on a mini-market format, economy. Major initiatives include increasing which provides 250 grocery items at lower the number of large format stores such as prices. In tandem with these developments, the hypermarkets, superstores and departmental sub-sector is expected to grow 7.4% in 2011 stores. As at end-August 2011, a total of 166 foreign (2010: 8%).