Malaysian confidence down, ringgit won't be budged<\/p>\n
KUALA LUMPUR (AP): New economic research released Tuesday
\nlowered Malaysia's economic growth prospects this year from 5
\npercent to 4 percent and showed that consumer confidence was
\nslumping as people worry about their job prospects.<\/p>\n
The Malaysian Institute of Economic Research released a
\nquarterly report stating that weak labor markets are weighing on
\nconsumers' minds, while the slowdown in the U.S. economy and
\nuncertainties about government pump-priming are likely to shrink
\ngross domestic product growth.<\/p>\n
The economy should grow far below 4 percent in the first half
\nof the year, with first quarter growth "very, very low," Mohamed
\nAriff Abdul Kareem, executive director of the institute, told a
\nnews conference.<\/p>\n
Mohamed Ariff said that the central bank's revision last month
\nof its forecast for annual GDP growth, from 7 percent down to
\nbetween 5 percent and 6 percent, was "off the mark."<\/p>\n
Mohamed Ariff also expressed concern over lower international
\nreserves, which dropped to US$27.2 billion as at the end of March
\nversus $28.7 billion as at March 15. The shortfall has been
\nattributed partly to rising overseas investments by Malaysians.<\/p>\n
"We have to bring that under some kind of control for the time
\nbeing," Mohamed Ariff said. "It will be a long time before it
\nbrings income back home."<\/p>\n
Malaysia should float the ringgit, which has been pegged at
\n3.8 to the U.S. dollar since September 1998, as soon as the
\neconomic growth picks up, Mohamed Ariff said, saying the exchange
\nrate has implications for exports, long-term investment and
\ngrowth.<\/p>\n
But separately, Prime Minister Mahathir Mohamad dismissed
\nsuggestions that the ringgit is overvalued, saying Malaysia will
\nnot be pressured into repegging it because of other depreciating
\nregional currencies.<\/p>\n
"Even if we re-peg lower to make things cheap and competitive,
\nthere will not be a good market for our products and services if
\ndemand from the U.S. and the economies depending on it spiral
\ndown," Mahathir was cited by the national news agency Bernama as
\ntelling reporters.<\/p>\n
The institute's sentiments index fell to 105.7 points in the
\nfirst quarter, substantially down from 120.70 points in same
\nquarter last year and the previous quarter's 115.6 points.
\nPrivate consumption is expected to decelerate to 6.5 percent
\ngrowth in 2001 from 12.4 percent in 2000.<\/p>\n
Consumers are worried not only about jobs, but are
\nincreasingly concerned that their finances will worsen in the
\nshort-term, the report said. It noted that spending on home-
\nrelated goods is bottoming out and even enthusiasm about buying
\ncomputers is waning.<\/p>\n
"Clearly, consumers are increasingly concerned about jobs and
\nincomes," the report said. "As long as the job market is
\nshrinking, a quick rebound in spending looks quite remote in the
\nnear future."<\/p>\n
More than 3,000 workers were laid off in the first quarter,
\nthe deputy human resources minister said last week, but the
\nunemployment rate remains below 4 percent and the country is
\nconsidered to have full employment.<\/p>",
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