Malaysia revises up growth in 2009

16:48, October 23, 2009      

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The Malaysian government has narrowed the country's gross domestic product (GDP) contraction for 2009 to 3 percent.

The adjustment, as released in the Economic Report 2009/2010 by the Malaysian Finance Ministry on Friday here, is made following the gradual recovery in the external sector.

Another factor contributing to the narrower GDP contraction is the impact of the two stimulus packages totaling 67 billion ringgit (19.14 billion U.S. dollars) announced in November 2008 and March 2009.

The report said that Malaysia's economic fundamentals remained intact despite the challenging external environment, giving hope for the country to achieve a modest growth in 2010.

Earlier, the country officially projected that its GDP growth for 2009 to contract by four to five percent.

According to the report, the Malaysian economy contracted in the first half of 2009 due to weak external demand with exports declining sharply by 16.3 percent.

Lower disposable income and cautious spending by households resulted in a fall in private consumption while investments showed significant decline, said the report.

The report added that these together contributed to the contraction of the country's economy by 5.1 percent in the first half of 2009.

It also said that the services and construction sectors were envisaged to be the major contributors to economic activities, while the public investment and private consumption played supportive roles from the demand side.

While it is said that consensus that the global downturn has stabilized is emerging, there are concerns of downside risks that may impede economic recovery.

The report noted that high unemployment, weak private consumption spending, slow credit expansion, low corporate investments and dissipating effects of stimulus packages were among the issues that must be addressed.

While the Malaysian government's tax revenue had plunged sharply, the report said the challenge ahead was to revitalize investments, safeguard the people's welfare and manage rising expenditure without affecting efficiency.

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