Malaysia’s economy is expected to see 5.5% growth in 2014, said Dr Shane Oliver, Head of Investment Strategy & Chief Economist, AMP Capital.

He said next year, Malaysia’s growth rate was expected to pick up to around 5.5% after 4.5% in 2013.

“This should be helped by the monetary easing of the last year or so along with slight pick-up in global growth (from 3% in 2013 to around 3.5% next year),” he told Bernama.

It was earlier reported that Douglas McWilliams, Institute of Chartered Accountants in England and Wales’ Chief Economist and Centre for Economics and Business Research Ltd Executive Chairman, had said the Malaysian economy was expected to be brighter next year with the recovering global economy and exports growth.

He said the return of growth in the eurozone and stronger expansion in the US would offer countries in the Asean region space to enact necessary the economic and social reforms.

Meanwhile, United Overseas Bank (UOB) expected Malaysia’s economy to grow by 5.2% next year, driven by higher exports and benefiting from stronger demand as key global economies recover.

UOB Senior Economist, Alvin Liew, was quoted as saying the implementation of tax reforms, subsidy rationalisation and other initiatives in the government’s Budget 2014 would bring higher revenues and contain fiscal deficit at 3.5% of the gross domestic product.

Oliver said: “So I agree with the two forecasters.”

On Malaysia’s tax reform, he said it might create a bit of uncertainty and volatility.” “But overall I think should be positive for economic growth as the combination of a good and services tax and reduced subsidies and personal tax should result in a more efficient tax system,” he said.

On the key developments for investors in 2013 and the outlook for 2014, Oliver said: “2013 has turned out to be another good year for investors as various threats faded and the global economy remained in a cyclical ‘sweet spot’ of improving growth, low inflation and low interest rates.

He said this has resulted in solid overall returns.

“Next year is likely to see improving growth globally and in Australia, and with inflation and interest rates remaining low this should provide a positive backdrop for growth assets even as bond yields gradually continue to drift higher,” he added.

However, Oliver cautioned that with shares no longer dirt cheap and dependent on rising earnings, volatility was likely to be a bit higher and returns a bit more constrained.

“The main risk to keep an eye on is a sharp sell in bond yields perhaps on the Federal Reserve System tapering or much stronger growth,” he said

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