Malaysia Political and Economic Outlook for 2011 and Beyond

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Malaysia's General Outlook 2011-2014

This hub takes a look at the political and economic outlook of Malaysia for 2011 to 2014. The main source of this outlook is the Economist Intelligence Unit (EIU). According to the EIU report filed for October 2010, the following highlights are forecasted for Malaysia's political and economic outlook for 2011 to 2014:

 The Barisan Nasional (BN) coalition is expected to remain in power in the early part of the forecast period (2010-14). The BN has a sufficient parliamentary majority to pass most legislation unchallenged.

The next general election must be held by April 2013. However, we believe that the BN will stick with tradition and call elections a year before its term ends, making early 2012 a possible date.

Fiscal policy will be tightened as the government strives to balance its budget by 2020. Monetary policy will also be tightened as domestic demand remains healthy in the forecast period.

The economy is expected to stage a strong recovery in 2010, growing by 6.8%. However, this relatively rapid acceleration mostly reflects the rebound from the contraction in 2009. Growth will average 4.9% a year during 2011-14.

The annual rate of inflation is expected to average a subdued 3% in 2010-14. Government efforts to rationalise the country’s extensive subsidy scheme will exert an upward influence on prices in the forecast period.

Despite the relatively fast pace of growth of merchandise imports compared with that of exports, Malaysia will continue to post substantial trade and current-account surpluses in 2010-14.

Where is Malaysia Located?

Malaysia is located in Southeast Asia between Indonesia and Thailand. Malaysia's geography is a bit odd in that the country's land is spread out between a peninsula and an island - the west section of Malaysia is attached to the southern tip of Thailand and the eastern section  attached to Kalimantan, one of Indonesia's larger islands.

Malaysia's Political Outlook for 2011 and Beyond

According to the Economist Intelligence Unit, Malaysia's political outlook for 2010-2014 should be relatively stable in the near period of the forecast, but could encounter a modest threat in the later part of the forecasted time period.

From their research and expertise EIU reporters observed that in the past 50 years or so stability in Malaysia's political situation depended on three calming factors:

  • the firm power enjoyed by the Barisan National coalition;
  • the tight control the United Malays National Organization has exerted over the BN;
  • the continued support of the Malay majority for the United Malays National Organization.

Yet, the March 2008 general election demonstrated that all three factors or onfluences weakened to some extent. Consequently, those traditional influences may prove unable to hold the Malyasia's political framework together for the forecast period through 2014. However, possible instability should not be expected to come from outside the United Malays National Organization, but rather from inside it. This possible result will be due to the fact that the main opposition party, the Pakatan Rakyat does not appear situated to draw sufficient support to be a threat, and the United Malays National Organization's determination to stay in power at all costs.

According to EIU experts, the ability to make or break the Barisan National coalition seems to be in the hands of political parties from Sabah and Sarawak since nearly one third of the representatives come from those two Malaysian states. Both Sabah and Sarawak are located on the island of Borneo. Due to growing dissatisfaction with the federal government the Barisan National coalition's Boreno powerbase is likely to erode which could cause an uprising within the coalition. The outcome from the 2008 parlimentary elections showed that the United Malays National Organization can no longer count on the support of the majority of Malays.

Malaysia's Economic Outlook for 2011 and Beyond

According to the Economist Intelligence Unit, Malaysia is expected to move to a sustainable growth path in 2011-2014. Rebounding from a negative growth rate in 2009, economic forecasters expect real GDP to average 4.9% per year. Data from the first half of 2010 showed the Malaysian economy expanded by 9.5% and it is expected to grow by 6.8% for the year.

On the expenditure side, private consumption and investment will remain the main drivers of growth in 2010-2014 and exports of goods and services are expected to grow by a rate of 9% a year for the same period of time.

According to EIU researchers, the services sector will be the the largest sector of the economy due to the government's aim to become a high-income nation by 2020. Even so, the industrial sector will still form a good size part of the economic outlook, but is expected to remain smaller than the services sector through 2014. The contribution of agriculture will be important as the production of palm oil will help raise incomes for rural families.

Even as imports continue to grow, Malaysia's balance of accounts will continue to tilt in a positive direction meaning Malaysia will continue to post trade surpluses. Malaysia continues to look for viable international trade partnerships that propel their economy forward.

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Comments 11 comments

telltale profile image

telltale 6 years ago

I believe the figures and results you mentioned in your hub may probably be accurate if all the info are obtained from the present government or the party in power. However, I don't think it is absolute when you take other factors into consideration. The statement of "UMNO's determination to stay in power at all cost.." is probably the truest mentioned in your hub. While PR may not be exactly in sync entirely amongst its coalition partners currently, the EIU should not discount it as 'weak'. The BN has lost all its re-election campaigns since 2008, except for one where monetary compensation was openly promised, according to a video which is also available in YouTube.

The other thing I agree with the EIU report for 2010-2014 is that the BN will remain in power in the early part of the period forecast, since this is before the next Election. Nobody actually knows whether BN will remain in power after the next GE is called, and I think this is what the BN is afraid of - doing what it can to re-align the electorals, which is alleged by the opposition parties, to be more favorable to the ruling party. It's probably a wait and see situation, and the clearer picture may come in when it is closer to the coming election period.


dahoglund profile image

dahoglund 6 years ago from Wisconsin Rapids

Truthfully I have not thought about Malaysia much. This introduces me to it.


ecoggins profile image

ecoggins 6 years ago from Corona, California Author

telltale, thank you for stopping in and adding to this hub. I appreciate your comments and expertise on Malaysia and their political outlook. From my knowledge Malaysia has the second most stable economy in the ASEAN pact next to Singapore (not largest but most stable) is that true? If so, do you think the Malaysiam economy will be adversely affected by the outcome of the next elections?

dahoglund - you are not alone in not thinking much about Southeast Asian countries. Many from the western cultures do not know of or think about that part of the world. But, did you know that the ASEAN trade pact is the fastest growing economic region in the world and the third largest trade pact in the world next to the European Union and the North American Free Trade Agreement.


telltale profile image

telltale 5 years ago

If you compare the Malaysian economy with the rest of ASEAN, then you may be correct. Malaysia's economy is a pale comparison to Singapore - if you look up the currency exchange you will know what I mean. Singapore, literally has no natural resources, where Malaysia has abundance - the currency exchange should be reversed, but it is not!

I don't think the Malaysian economy will be adversely affected by the outcome of the next elections, if there is a change of government - unless the margin is a very narrow win for PR, where the BN will probably do its best to try to topple it - that's where the adversity will come into play.

Just an indication on how PR Government will perform, if elected, hope you look at this article at :

http://www.malaysiatoday.com/content.php/234-PENAN...

Of course, there are issues to be contended with... but just look at the performance index.. not trying to write a hub here, but just to answer your question...


ecoggins profile image

ecoggins 5 years ago from Corona, California Author

telltale, thank you again for your contribution. I absolutely appreciate that you took time to answer my question. I have learned quite a bit from your comments and answers.


KenWu profile image

KenWu 5 years ago from Malaysia

BN will definitely say in power in the next coming election. There are so many variables which are in controlled by the current government which make it unshakable. About the overall economic situation, sometimes what is perceived does not necessary to be truth. Dressing is the power to look good. Well, we all know that government never lies.


ecoggins profile image

ecoggins 5 years ago from Corona, California Author

KenWu, Thank you for your input in this conversation. I appreciate your insights. So would you say that the economic situation in Malaysia is not as good as reported?


KenWu profile image

KenWu 5 years ago from Malaysia

ecoggins - That's what I'm trying to hint, but don't point to me if I ever led you to that. As reported, the general election is coming fast (maybe next year or the year after) and so the first and only thing that a government needs to do is to show to its people that everything is good and performing as it has promised. But the reality is far from being what is reported. I'm not saying that the economic situation is in its bad shape but nevertheless don't expect that it is as good as perceived. There are just so many things happening in the country which I think this space is not enough to touch all of them.

If you are more toward to the political aspect (of course economic aspect will be touched but lightly), you can spend your time at http://www.malaysia-today.net. This site reports the wrong doings of the government (both the government and opposition parties) and also un-filtered news of real economic situation. The person behind this news portal is now living in exile in UK.


ecoggins profile image

ecoggins 5 years ago from Corona, California Author

KenWu, I appreciate your expertise on this subject. Your insights have helped put things in proper perspective.


salil 4 years ago

I stumbled into this article while browsing around the topic of politics in Malaysia as a part of studies. I really liked the way the discussion is maintained by the author with proper replies. the information available and views expressed were of immense help. Can anyone suggest me a good source of information regarding business opportunities in Malaysia?


outoftown profile image

outoftown 4 years ago from For now, I'm really far away from where I actually come from - I'm someone out of town~:)

Wow, I've been to Malaysia before and for me, it had been great for me and my family. A really good info about Malaysia.

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