15 Feb 2012 Malaysia May Cut Rates By 50 Bps In 2012-Capital Econ

Capital Economics economist Sukhy Ubhi says Malaysia is expected to suffer a double hit from softer exports and lower commodity prices this year, while risks to domestic demand are also skewed to the downside;  "with this backdrop, we think it will be only a matter of time before the central bank loosens policy to support growth."  The house projects Malaysia's GDP growth at 3.0% in 2012, compared with 5.1% growth in 2011.  "Malaysia's trade-dependent economy is among Asia's most vulnerable to weaker external trends and, despite the improvement in global data over recent weeks, we believe that the world economy is likely to disappoint later this year,"  Ubhi adds in a note. The house expects a total of 50 bps in policy rate cuts for 2012, with the first 25 bps coming in 2Q. Malaysia's economy expanded 5.2% in 4Q, easing from 3Q's 5.8% growth.