KL trade surplus gives little cheer<\/p>\n
KUALA LUMPUR (Reuters): Malaysia on Monday posted a 4.2
\nbillion ringgit (US$1.1 billion) surplus in July, but exports and
\nimports fell in tandem reflecting slow economic growth in one of
\nthe world's most open, trading economies.<\/p>\n
Malaysia's export driven growth has been hard hit by the U.S.
\nslowdown and plunge in the global technology cycle, but Prime
\nMinister Mahathir Mohamad, who is also Acting Finance Minister,
\nsaid he saw no need to start pushing any panic buttons.<\/p>\n
\"Malaysia does not depend on fiddling with the exchange rate
\nor interest rates or pump priming on their own in order to grow
\nthe economy,\" Mahathir said in a speech opening the Malaysian
\nCapital Markets Summit 2001.<\/p>\n
Mahathir said the government fiscal boosters, delivered in the
\n2001 budget announced last October, and augmented in March, were
\nstimulating domestic demand, without driving up imports too much
\nand had given the construction and services sector a filip.<\/p>\n
The July trade surplus was up 200 million ringgit on the same
\nmonth last year, helped by imports falling 21.0 percent to 22.7
\nbillion ringgit, while exports fell 1.8 percent to 26.9 billion.<\/p>\n
The surplus is also 900 million ringgit bigger than June's, a
\njump of 27 percent, which prompted a knee-jerk jump in the local
\nstock market, which ended the morning session 0.73 percent up.<\/p>\n
But imports were down 1.5 billion ringgit on June's level, and
\nexports were down 600 million ringgit, leaving little to cheer
\nabout.<\/p>\n
The fall in imports was largely driven by capital goods,
\nreflecting subdued investment.<\/p>\n
For the first seven months of 2001 the surplus of 30.0 billion
\nringgit was 2.8 billion less than a year ago, and exports were
\n6.0 percent down, while imports contracted by 5.5 percent.<\/p>\n
Malaysia's dynamic electronics sector is spluttering due to
\nweak U.S. demand. Its exports accounted for 55 percent of the
\nJuly total, but at 14.7 billion ringgit it was down 23 percent on
\nlast year's level.<\/p>\n
NO CHANGE IN RATES OR RINGGIT<\/p>\n
The government says that unlike fellow export-oriented
\neconomies, Singapore and Taiwan, Malaysia has avoided recession.<\/p>\n
After recording 8.5 percent growth in 2000, Malaysia recorded
\njust 0.5 percent growth in gross domestic product in the second
\nquarter, compared with a year ago.<\/p>\n
Malaysia adopted a low interest rate strategy to recover from
\nthe Asian financial crisis three years ago, and has not budged
\nsince. Mahathir saw no reason for a further cut in rates already
\namong the lowest in the region.<\/p>\n
The officially-listed three-month Kuala Lumpur inter-bank
\noffered rate (KLIBOR) has been rangebound between 3.20-3.30
\npercent, but the three-month rates have been trading at 2.85-2.89
\npercent on expectations that monetary policy would stay soft.<\/p>\n
Mahathir said there was no reason to devalue the ringgit,
\nwhich was pegged at 3.8 per dollar in late 1998.<\/p>",
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