Malaysia will achieve a 6.7 percent growth this year with higher exports earnings expected to boost investment further towards year-end, according to OCBC Ltd.

 

OCBC economist Gundy Cahwadi said Malaysia was on track to achieve the target as exports were now growing at the fastest pace since 1998, although private investment growth was disappointing in the first quarter.

He said the export of major commodities had almost returned to the level seen before the collapse of global demand at the end of 2008.

Cahwadi said in addition, growing domestic spending, stronger ringgit and bullish stock market would also contribute to the steady growth.

"Malaysia's medium-term economic fundamentals remain attractive with the ringgit expected to be at the 3.2 level (against the US dollar) by year-end," he told reporters in Kuala Lumpur today.

Another OCBC economist, Emmanuel Ng, said positive news from China and the bull run in emerging markets provided a silver lining to Asian currencies despite mounting concerns about the European debt crisis.

He said that China's promise to add more flexibility in the yuan's fixed exchange rate had boosted optimism concerning the global economic recovery.

Dependent on Chinese growth

In the next 12 to 15 months, the ringgit is expected to appreciate further to hit the 3.15 level against the US dollar, Ng said, adding that the last time it had touched the 3.15 level was in May 2008.

"Basically, the yuan anchors the stability of the region. The move surprised the market, indicating that the global market is improving," he said.

Ng said many analysts anticipated a slowdown in Europe but as long as the Chinese economy kept growing at eight to 10 per cent, the Asian growth would be supported.

"This will also lead to more demand for risk-averse assets in Asia," he said.

According to Ng, Asia will also benefit with China's plan to invest more in the region.

"What we are going to see in the next five to 10 years, Chinese investments are going to pour in more and more into Asia and this a perfect shift," he said.

- Bernama