From The Wall Street Journal
By Elffie Chew
KUALA LUMPUR — Malaysia’s economy shrank a worse-than-expected 6.2% in the first quarter from a year earlier because of a steep fall in exports and manufacturing, data released Wednesday showed.
Central bank Gov. Zeti Akhtar Aziz said economic conditions remain tough, and the economy is likely to register a similar performance in the current quarter.
The first-quarter contraction is the country’s first in nearly eight years and the worst since the fourth quarter of 1998 when GDP fell 11.2% from the previous year. It was more severe than the median 4% forecast by 18 economists polled by Dow Jones Newswires, and reverses the 0.1% growth eked out in the fourth quarter of 2008.
“We are now going into the third month of the second quarter; from what we have seen, export demand continues to be weak and economic conditions are still challenging despite early signs of an improvement,” Ms. Zeti said. Second-quarter gross domestic product “will be similar to the first quarter.”
Economic conditions, however, are expected to improve in the second half of 2009, supported by the government’s fiscal-stimulus measures and Bank Negara Malaysia’s efforts to increase financing for the private sector, Ms. Zeti said.
“Though Malaysia’s first-quarter GDP was worse than expected, it is not out of line with patterns in the region,” said David Cohen, an economist at Action Economics in Singapore.
For 2009, the current GDP forecast is a range of between a 1% contraction and a 1% expansion, but Second Finance Minister Ahmad Husni Hanadzlah said Tuesday that it “will definitely be below minus 1%.”
Prime Minister Najib Razak will announce a revision to the full-year GDP forecast on Thursday. Economists polled by Dow Jones Newswires predict a median contraction of 1.6% for 2009.
Why everytime in recession, fiscal stimulus package will be introduced.. I know according to Keynes concept its contribute economy activities, but why not we study the alternative.
Gov. had lowered OPR to 2%, to stimulate growth & allow companies with lower ratings to have access to funds through the bond market. Small Debt assist viable small and medium enterprises repay loans even exceeding RM3 million. Of course M’sia’s domestic financial markets remained sustainable bcoz supported by a formidable banking sector with high liquidity and with little direct exposure to the global financial crisis.
Did the services sector still remain as the main driver of growth in the Malaysian economy??
construction sector should be grow if gov. expedite the implementation of infrastructure projects under the two economic stimulus package. Manufacturing sector absolutely decline due to the impact of the global crisis on export. As well…Agriculture & mining sector also to be shrunken effected frm global demand.
FDI shows below moderate. Meanwhile, our reserves as at 13 March 2009, stood at RM314 billion (USD90.6 billion), sufficient to finance 7.7 months of retained imports and 3.9 times the country’s short-term external debt. what Iam concern, did gov. ready to face any consequences with the abovestated reserves that Msia hold…..
Reply
RM60 billion stimulus package enough to create more employment, but only RM2 billion from RM60 billion allocated to employment, is this enough????
We need government reviews its policies in expenditure too more strategic effort to stimulate the economy. We also want to hear how the fiscal stimulus package was spent & needs credible institutions to monitor. Enable public to access information on a website, so people can scrutinize expenditure & progess of stimulus package, to ensure transparency & integrity.
Reply