KUALA LUMPUR: As the 12th general election nears, the issue of Barisan Nasional returning to power remains a non-issue for market watchers as the country’s economy has done well over the past few years. Rather, their attention is glued to the global economic drag this year because of a slowdown in the United States.

“When it comes to the Malaysian economy, there is little room to debate because it has done well under the last BN term. This is a big plus for the incumbent in an election with an economy that is creating jobs,” CIMB-GK Research regional economist Song Seng Wun said when contacted.

He said the price boom in commodities has benefited Malaysia’s plantation sector including farmers and smallholders and he expects exports from the sector to remain firm even in the event of a sharp global slowdown.

The research director of another foreign investment firm, who declined to be named, expects the BN to exceed the two-third majority mark in parliament with a comfortable margin.

“The BN may not win as big as before but it will be a comfortable win. Abdullah has put money into the pockets of citizens. Compared to five years ago, there are more new cars, people are dressing and eating better,” he said, referring to Prime Minister Datuk Seri Abdullah Ahmad Badawi. “Yes, the cost of living has gone up but the people are enjoying a higher and better quality of life.”
Anthony Dass, research head of InterPacific Research, noted that the usual pre-election rally in the stock market has been dampened by concerns over the global economy.

“There has been no election play this time. In the past 6 elections since 1982, the stock market rose by an average 2 per cent in the two weeks leading to the election except in 1986 due to a recession then,” he said. “But it is good that we are not seeing any artificial spikes in the market or attempts to suppress the value of the ringgit.”

On the first term of the BN government under Abdullah since 2004, Dass said the government had shown “more decisiveness” in the monetary, fiscal and exchange rate policies.

He pointed out however that these 3 policies face trickier times ahead because of the dampening global scenario as Malaysia reports its Gross Domestic Product (GDP) for 2007 next week.

Song said: “We expect fourth quarter growth of 6.5 per cent last year and 6.2 per cent for the whole of 2007. For 2008, we are looking at 5.8 per cent on the assumption of a global slowdown and softer external demand affecting some segments of exports, but resource exports will be firm despite a sharp slowdown.”

Dass forecast the GDP growth at 6 per cent for last year and 5.7 per cent for this year with the possibility of a downgrade, depending on the state of the global downturn.

“2007 was quite a good year but it is a different scenario this year, people on the street can expect to see prices increase further and their real disposable income could be affected,” he said.

The research director, who declined to be named, said: “It is very important that once the election is over the government should resume its pro-growth policies to counter balance the slower global growth and rising cost of living.”