Analysts upbeat about Malaysia's economy<\/p>\n
By M. Jegathesan<\/p>\n
KUALA LUMPUR (AFP): Malaysia's economy has slowed to a
\nhealthier pace, according to the government's 1996 economic data,
\nbut analysts warned Sunday inflation and a weak trade balance
\nwere still major concerns.<\/p>\n
\"Fears of an overheating economy have dissipated,\" said
\nDesmond Ch'ng, economist with South Johor Securities, a local
\nbroking firm.<\/p>\n
But Ch'ng said inflationary pressures continued to persist.
\nThe sharp slow down in the construction sector to 9 percent last
\nyear from a robust 15 percent in 1995 was also a point of
\nconcern, he said, reacting to economic data released at the
\nweekend.<\/p>\n
Deputy Prime Minister Anwar Ibrahim said last Saturday
\nMalaysia's growth slowed to a healthier and more stable pace of
\n8.2 percent last year, after a sizzling 9.5 percent growth in
\n1995.<\/p>\n
Inflation rose to 3.5 percent last year from 3.4 percent in
\n1995. Anwar, who is also finance minister, said the slower
\neconomic growth had helped shrink the country's current account
\ndeficit to a more manageable 11 billion ringgit (4.4 billion
\nringgit) from a hefty 18.7 billion ringgit in 1995.<\/p>\n
The 1996 data revealed that the economy is \"healthier\" than in
\n1995 with economic growth kept at a more manageable pace, Ch'ng
\nsaid.<\/p>\n
Other analysts were generally upbeat about Malaysia's economy,
\nbut warned that the government should not be complacent as
\nconcerns over rising inflation and a weak trade balance remained.<\/p>\n
\"Inflation was curtailed at 3.5 percent last year, but the
\nreal life situation for the lower income group could be higher.
\nThe price of basic food items like fish is rising,\" said Ramon
\nNavaratnam, a former treasury official turned corporate figure.<\/p>\n
The 8.2 percent growth rate last year had, nevertheless, put
\nto rest fears that the Malaysian economy was beginning to
\ndecline, said Navaratnam, who is group corporate adviser to
\nproperty group Sungei Way Group.<\/p>\n
\"I do not believe the stable growth rate happened
\nunexpectedly. Policies were adopted to address the balance of
\npayments problem,\" he added.<\/p>\n
He said since late 1995, the government had discreetly slowed
\ndown its spending on mega projects to \"cool the economy\".<\/p>\n
\"Putrajaya, the new federal administrative township project is
\nnot moving that fast... the project is phased over a longer
\nperiod,\" Navaratnam said.<\/p>\n
Navaratnam suggested that the federal government find ways to
\nmake the states provide more land for food production so that
\nprices of basic food items could remain stable.<\/p>\n
\"The private sector has to be given incentives to indulge is
\nfood cultivation so that the import bill for food could be
\nreduced,\" he added.<\/p>\n
South Johor's Ch'ng predicted the trade deficit may widen in
\n1997 as imports of capital goods would continue to be high. With
\nimports expected to outpace exports, the trade deficit would
\nremain high and put pressure on the current account.<\/p>\n
The current account could widen to 13 billion ringgit this
\nyear, from 11 billion ringgit last year, Desmond said,
\nforecasting growth to be sustained at 8.2 percent this year.
\nThe economy has been growing at above 8 percent a year since
\n1987.<\/p>\n
\"The outlook for 1997 is bright. We will enjoy the 10th year
\nof sustainable economic growth but we cannot rest on our laurels
\nas lingering concerns persist,\" Desmond said.<\/p>",
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