Najib: GDP growth may be revised if other nations fail

THE success of stimulus packages in advanced nations will determine the health of the Malaysian economy, says Finance Minister Datuk Seri Najib Tun Razak.

He said there is every possibility of Malaysian exports being affected if stimulus packages in those nations did not have a positive impact.

If the economies of advanced nations do not recover, the Government will revise the projected 3.5% gross domestic product growth for this year. “However, the revision will consider the strength of our economy in addressing the unpredictable outside influence,” Najib, who is also Deputy Prime Minister, said.

“Malaysia has strong fundamentals and is able to withstand economic challenges,” he said.

He noted that the country’s international reserves on Jan 30 totalled US$91.3bil (RM237.3bil), equivalent to 7.5 months of deferred imports.

He said the banking system was also stable with a high risk capital ratio of 12.6% as of December 2008, more than the Basel international standard of 8%, and non-performing loans at a low 2.2%.

Inflation is expected to increase at a stable low rate, he said in reply to Alexander Nanta Linggi (BN – Kapit), Lim Guan Eng (DAP – Bagan) and 12 other MPs who had asked what steps the Government had taken and would take to minimise the negative impact of the global financial meltdown.

Najib said that since the stimulus package was introduced in November, the world’s economic situation had continued to worsen. Hence the need for a bigger and more comprehensive stimulus package, which he would announce on March 10.

On Feb 4, the International Monetary Fund lowered the world economic growth forecast for 2009 to 0.5%, from 2.2%, while the forecast for world trade growth was revised downwards from 2.1% to -2.8%, he said.

The prospects of economic growth in advanced countries too are not encouraging: -1.6% for the United States, -2.8% for Britain, -2.6% for Japan, -4% for Taiwan, -2% for South Korea and -4.9% for Singapore.

Lower growth was also expected for China and India, at 6.7% and 5.1% respectively, Najib said.

With the world environment becoming more challenging, Malaysia’s exports experienced falls of 2.6% in October, 4.9% in November and 14.9% in December, with respective falls of 12.8%, 8.2% and 15.5% in the Industrial Production Index, he said.

Between October and January, 11,595 workers were retrenched and 2,750 accepted voluntary separation.

The price of commodities remained bearish, with crude oil at an average US$40 a barrel compared with the high of US$147 in July 2008, palm oil at RM1,800 a tonne (compared with RM4,203 in March 2008), and rubber at RM4.50 a kilo (RM10.52 in July 2008).

Source : The Star

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