A resilient Asian economy, domestic demand and a strong balance sheet could well drive Malaysia's full year gross domestic product (GDP) to five percent, up from 4.3 percent, United Overseas Bank (M) Bhd (UOB Malaysia) forecasts.

uob jimmy kob 230812 According to UOB Group Research and Investor Relations head Jimmy Koh ( left ), strong domestic activity and sustained fixed investments in the first half of 2012 served to offset export demand slowed by external uncertainties such as problems in the Eurozone and weaker demand from the United States of America (USA).

The implementation of various policies such as the announced minimum wage for private sector and Economic Transformation Programme (ETP) projects the government is slated to carry out ahead of the general election is expected to bolster growth in the last quarter of the year and support private consumption and consumer spending.

"Various election-related projects being implemented (in Malaysia) is a reflection of the strong balance sheet in this part of the world," Koh said at a press conference today.

Strong balance sheets

Malaysia, he added, was backed by an increasingly resilient Asian economy strengthened by lessons learnt during the 1998 and 2008 economic crises and the flow of liquidity into the region as a result of the Eurozone crisis, as well as strong balance sheets of corporations, retailers, banks and policy-makers.

azlan "Now we are seeing the rise of Asia. The rise of every single country (in Asia) in a significant way," he said.

"We are seeing the rise of Asian banks (such as) Singaporean banks, Malaysian banks and even Japanese banks. The balance sheets of banks are able to cushion impact of assets being pulled by the West," he said, adding that a key factor was not Europe, but the growth of China.

Chinese policy-makers, he said, "have a better system than the West and this adds to the resilience in this part of the world."

Koh said while no country could be fully prepared to face the impact resulting from activities in the West, Malaysian policy-makers have responded with pre-emptive measures to mitigate the effects and ensure it is under control.

However, he warned, as with other Asian countries, Malaysia could not rely on its current strengths in the long term, warning that the country had a short window to find new areas to succeed in and drive the economy.

"What we can produce, other countries can produce over time. So (we) must keep finding new areas, a niche... to develop. It is not about being good. It is about being different."

As for the ringgit, Koh said the the Eurozone crises saw volatile trading against the US dollar in the second quarter and he expects the ringgit to hover between RM3.10 and RM3.15 to US$1 by the year-end.