A Stronger-than-expected economic performance in the first half of the year has led some economists to raise their growth outlook for Malaysia this year.
However, they felt the second half is unlikely to match the 9.5 per cent expansion in the first six months.
OSK DMG raised its 2010 growth forecast to 7.5 per cent from 7 per cent, but it thinks export contribution would fall due to weaker overseas demand.
"We expect slowing manufacturing growth in the second half on the back of more moderate demand from the US and China," said economist Enrico Tanuwidjaja.
The research house expects the US economy to grow by around 3 per cent and China by 8.8 per cent during the second half of the year.
The government is also expected to reduce its spending to manage its finances, added Tanudwidjaja, leaving two engines to support growth in the final two quarters, namely domestic consumption and investment.
"As a percentage of GDP (growth domestic product), private consumption has averaged around 48 per cent. With the share of 52 per cent in the first half, it is quite unlikely for consumption to move significantly higher from here."
But the removal of subsidies would also stifle spending power.
As for investments, there is room for greater improvement.
"To achieve the desired 6 per cent economic growth target as set in the Tenth Malaysia Plan, Malaysia would need to beef up investment spending to reach around 4 percentage point contribution (equivalent to an average of 17 to 18 per cent year-on-year growth)".
Wellian Wiranto, Asian economist at HSBC Bank, said that Malaysia's second quarter GDP data provided some pleasant surprises, such as investments growing 12.9 per cent year on year, adding 2.9 percentage points to growth in that period.
"Although very encouraging, it may be too early to see this as a resolute sign that the recent slew of government initiatives has been successful in breaking the back of the structural issue of lacklustre investment facing the country."
HSBC Bank estimates 5-6.5 per cent year-on-year growth for the last two quarters of 2010, based on less enthusiastic export growth.
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However, they felt the second half is unlikely to match the 9.5 per cent expansion in the first six months.
OSK DMG raised its 2010 growth forecast to 7.5 per cent from 7 per cent, but it thinks export contribution would fall due to weaker overseas demand.
"We expect slowing manufacturing growth in the second half on the back of more moderate demand from the US and China," said economist Enrico Tanuwidjaja.
The research house expects the US economy to grow by around 3 per cent and China by 8.8 per cent during the second half of the year.
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"As a percentage of GDP (growth domestic product), private consumption has averaged around 48 per cent. With the share of 52 per cent in the first half, it is quite unlikely for consumption to move significantly higher from here."
But the removal of subsidies would also stifle spending power.
As for investments, there is room for greater improvement.
"To achieve the desired 6 per cent economic growth target as set in the Tenth Malaysia Plan, Malaysia would need to beef up investment spending to reach around 4 percentage point contribution (equivalent to an average of 17 to 18 per cent year-on-year growth)".
Wellian Wiranto, Asian economist at HSBC Bank, said that Malaysia's second quarter GDP data provided some pleasant surprises, such as investments growing 12.9 per cent year on year, adding 2.9 percentage points to growth in that period.
"Although very encouraging, it may be too early to see this as a resolute sign that the recent slew of government initiatives has been successful in breaking the back of the structural issue of lacklustre investment facing the country."
HSBC Bank estimates 5-6.5 per cent year-on-year growth for the last two quarters of 2010, based on less enthusiastic export growth.
Read more: Economists raise Malaysia's growth outlook http://www.btimes.com.my/Current_News/BTIMES/articles/pdg/Article/#ixzz0xDzOWIZE
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