PUTRAJAYA, Malaysia_The recession in export-dependent Malaysia this year will be worse than expected, with the economy expected to shrink between 4 and 5 percent, the prime minister said Thursday.
The government had previously forecast an economic contraction of 1 percent, but had to revise the figure due to “very weak external demand” that has hit the country’s exports, Prime Minister Najib Razak told reporters.
He said exports have plummeted by 25 percent and private investment has fallen by 26 percent in the first quarter this year, compared to the same period last year.
The government expects the economy to show positive growth from the 4th quarter into 2010.
An indication of the bad news was given on Wednesday, when the central bank announced that the economy shrank a sharper-than-expected 6.2 percent in the first quarter from a year earlier.
The economy’s slump was largely due to a 17.6 percent contraction in manufacturing, as electrical and electronics exports plunged amid weak global demand, said Bank Negara Malaysia, the central bank.
It was the biggest fall in gross domestic product since the fourth quarter of 1998, when Malaysia fell into a recession during the Asian financial crisis. GDP shrank 7 percent from the fourth quarter.
Zeti said the central bank expects the economy to rebound in the second half and is confident of “positive growth” in the last quarter and into 2010 following the effects of the government’s fiscal stimulus measures totaling 67 billion ringgit ($18.6 billion).
All sectors of the economy shrank in the first quarter, except for construction which grew 0.6 percent due to new commercial and residential developments.
Source : AP