Malaysia's economy remains resilient

DESPITE sluggish growth among nearly all its neighbours, Malaysia's third-quarter growth accelerated unexpectedly to 5 per cent on the back of strong domestic demand and a turnaround in exports. That means real GDP (gross domestic product) growth for the whole of 2013 is likely to fall within the government's projection of between 4.5 and 5 per cent.

If anything, economists have become even more bullish. RAM Holdings economist Yeah Kim Leng thinks that the country will grow at between 5 and 5.5 per cent. It is a view that is shared by the Bank of America Merrill Lynch and the government of Malaysia. Barclays Bank, on the other hand, estimates next year's growth at 5.7 per cent. And all talk that the country might face a "twin deficit" as it did in 1997 has vanished.

A country experiencing a budget deficit as well as a current-account deficit on its balance of payments can be vulnerable to speculative attacks, as Malaysia discovered during the 1998 Asian financial crisis. The talk surfaced after the country's current-account surplus in the second quarter declined sharply to less than RM3 billion (S$1.17 billion).