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AWSJ: BNM Forecasts 5-6% Economic Growth
By Chris Prystay

30/3/2001 6:30 pm Fri

[Kadar pertumbuhan ekonomi diramalkan sekadar 5-6% sahaja, lebih rendah dari kadar ramalan PM tahun lepas yang mendabik dada pandai menguruskan ekonmi dan merasa tidak terjejas oleh kemelesetan di A.S.

Kerajaan lebih memberi fokus kepada pengguna berbelanja sedangkan ia sepatutnya memberi penekanan di sebelah pembekal dan menurunkan kos. Menurut analis, ringgit amat perlu di nilai semula jika tidak ia akan terlebih nilai dan mengurangkan saingan. Rezab antarabangsa negara telah susut sebanyak $5.5 bilion sejak 9 bulan lepas dan jika ia terus menggelongsor, ringgit akan semakin tertekan.

Tetapi wang di dalam bank pula mahu digunakan untuk menampung kesusutan tersebut. Soalnya wang siapa sebenarnya jika tidak kita sendiri yang empunya juga?
- Editor

The Asian Wall Street Journal
29th March 2001

Malaysia Central Bank Forecasts
Economic Growth of up to 6%


KUALA LUMPUR, Malaysia -- Citing vulnerability to the economic slowdown in the U.S. and Japan, Malaysia's central bank forecast that the country's economy will grow by 5% to 6% this year, down from a government estimate of 7% in October.

Malaysia Plans to Spend $789.5 Million to Soften Effects of U.S. Economic Ills (March 28)

Malaysia Expects to Expand Budget by $394.7 Million for Poverty Work (March 26)

"Growth will be affected by the less-than-encouraging global conditions," said Zeti Akhtar Aziz, governor of Bank Negara, when she released the central bank's annual report Wednesday. "But Malaysia has the policy flexibility to respond to the slowdown. We have low external debt," she said, and "we have a high rate of savings."

Tuesday, Prime Minister Mahathir Mohamed announced a three billion ringgit ($789.5 million) fiscal stimulus package to mitigate the impact on Malaysia of a slowing U.S. economy. Before the package was announced, the central bank had projected that Malaysia's economy would expand by 5% this year. But it now says the package could add 1.1 percentage points to the forecast. Economic growth last year was 8.5%.

Malaysia is particularly exposed to the slump in demand for electronics from the U.S., which last year imported goods, mostly electronic products, equivalent to about 23% of the country's economic output. Bank Negara now expects output growth in the key electronics sector to slow to 9.4% from 45% last year. The central bank forecast that total manufacturing output will rise by just 8.7% this year, compared with 25% in 2000.

Dr. Zeti Akhtar said the challenge for Malaysia is to sustain the confidence of the private sector. "It wouldn't be prudent to allow negative expectations to gather momentum and become self-fulfilling," she said in the annual report.

The October budget contained spending measures of 28.8 billion ringgit to spur the domestic economy. The central bank predicts these measures will push up private consumption by 7% this year, compared with 12% growth in 2000. Private investment will rise by 9.2% in 2001, compared with 27% last year.

The latest forecast still exceeds that of many private economists who have scaled back their estimates in recent months. Pump priming, they say, can only do so much for a small, export-oriented economy. "You have to focus on [the] supply side, and on cost, and the most important cost to Malaysia is the ringgit peg, which is now in danger of being overvalued," said Vincent Low, an economist and fixed-income strategist at Merrill Lynch.

Many private economists also worry that if Malaysia's international reserves, which shrank by $5.5 billion in the nine months to February, continue to fall, Kuala Lumpur's fixed-exchange rate of 3.80 ringgit to the dollar will face further pressure.

Dr. Zeti Akhtar said the central bank remains undeterred. "We aren't going to change the ringgit peg because of short-term developments," she said. The peg was introduced in September 1998 during the Asian financial crisis to fend off currency speculators.

Malaysia had $29 billion in foreign reserves at the end of February, which is sufficient to cover 6.3 times its short-term external debt, and finance 4.3 months of imports. That's still higher than the low of 3.8 months for import coverage in 1997, a central-bank official said.

"Even if reserves are falling, we have mopped up 60 billion ringgit in excess liquidity in the banking system; ... we can always put this back into the system. So I don't think there will be any problems with monetary policy," the official said.

Write to Cris Prystay at

Malaysian Malaise?

Selected economic indicators, percentage change

Items 1998 1999 2000 2001*
Real GDP -7.4 5.8 8.5 5-6
Private consumption -10.8 3.1 12.4 7
Public consumption -6.6 6.3 1.7 12.3
Private investment -55.2 -21.8 26.7 9.2
Public investment -8.4 15.9 21.7 8.9
Current-account balance
(as a % of GNP) 99.4 117.2 113.5 --
Net international reserves
(as months of retained imports) 5.7 5.9 4.5 --


Source: Bank Negara Malaysia annual report