Prime Minister Abdullah Ahmad Badawi could ride on signs of a sharp economic rebound to win a decisive mandate in weekend elections as he targets corruption and woos foreign investors, economists say.

Economic indicators appear to be favouring the Barisan Nasional coalition in its showdown with the ultra-conservative opposition Islamic party PAS, which is seeking to strengthen its influence by trying to wrest control of more states in Sunday's balloting.

Gross domestic product grew 5.2 percent last year and is poised to expand between 5.5 and 6.0 percent this year, according to the Central Bank.

Some private sector economists are predicting a sizzling 7.0 percent surge, which should be one of the highest in the Asia-Pacific region.

"It's always very useful for the incumbent when the economy is in the middle of a recovery cycle," said Song Seng Wun, a regional economist with GK Goh brokerage in Singapore.

Prices for commodities that Malaysia exports such as rubber and timber are higher, which should be good news for the rural sector, said Song, who sees GDP growing between 6.0 and 7.0 percent this year.

Even prices for oil, which accounts for about a quarter of government revenues, are also in their highs at more than US$37 dollars a barrel for the benchmark New York light sweet crude.

'More spring in people's steps'

In the key manufacturing sector, exports of processed food and computer parts and peripherals are also soaring.

Malaysia's exports in January were their highest for that month in a decade at RM34.02 billion due to growing global demand, the government said.

"It looks like the external sector is doing very well. For the domestic economy, if you look around at towns and cities, there is more spring in people's steps. So what else do you need if you are the incumbent?" Song told

Azrul Azwar, an economist with MIDF Sisma Holdings Sdn Bhd in Malaysia, said a huge win for Abdullah, who is seeking his own mandate after succeeding Mahathir Mohamad in October, would help attract foreign investors.

"A landslide win means the ruling government would be able to continue its set policies. It could lure foreign investors and fund managers into the country to boost economic growth," he said.

"With the help of internal dynamism on a low-interest rate diet and a gradualist approach to deficit-trimming, the Malaysian economy should be able to ensure broad-based growth across all sectors notwithstanding a number of 'clouds' overshadowing the outlook," he said, citing health risks like the Severe Acute Respiratory Syndrome and terrorist threats.

"This year, we believe the Malaysian economy will continue to draw strength from overseas demand, continued capital expenditure recovery among businesses and upheld consumer spending while the government will gradually consolidate its fiscal position."

Populist measures

Song of GK Goh said the opposition was "handicapped" by lack of issues against the government and some of the economic policies it had unveiled such as cutting taxes on motor vehicles and reducing highway tolls "seem to be populist measures designed to woo votes."

PAS, which aims to turn Malaysia into an Islamic state if it attains power, controls two of the country's 13 states and is working hard to expand its territorial conquest by appealing to mostly rural voters still to benefit from Malaysia's economic progress.

US credit risk evaluator Standard and Poor's said Abdullah needed a big mandate to enable him to push through with reform initiatives and tackle economic challenges.

Sovereign credit rating director Ping Chew said Malaysia must reduce its debt level and budget deficit as well as reverse a slowdown in foreign investment before its ratings, last upgraded to A-minus from BBB-plus in October, could be raised further.

Abdullah has also gained praise for his tough approach to root out corruption.

The Hong Kong-based Political and Economic Risk Consultancy in its latest survey cited Malaysia as an example where corruption was being handled more decisively. - AFP