Malaysian GDP growth may slow to 5.7%, MIER says<\/p>\n
Bloomberg
\nJakarta<\/p>\n
Malaysia's economic growth may slow to 5.7 percent this year from
\nan estimated 7.2 percent in 2004, the Malaysian Institute of
\nEconomic Research said, as overseas demand for the nation's
\nelectronics falters.<\/p>\n
The economic think-tank, whose forecasts are closely followed
\nby industry, expects Malaysia's U$115 billion economy to expand
\n5.3 percent in 2006.<\/p>\n
Southeast Asia's third-largest economy probably grew 7 percent
\nlast year, the fastest in four years, according to government
\nforecasts. The institute's estimates, announced today in Kuala
\nLumpur, were unchanged from forecasts made in December.<\/p>\n
Slowing economic growth in the U.S. and China may reduce
\ndemand for semiconductors, hard-disk drives and other electrical
\nand electronics products, which accounted for almost half of
\nMalaysia's exports in November.<\/p>\n
\"As the pace of expansion in industrial countries moderates,
\nMalaysia's export performance may cool down, while FDI inflows
\nmay be affected,\" the institute said.<\/p>\n
The think-tank said the U.S. will probably raise interest
\nrates this year, and China's economic growth will slow.<\/p>\n
China's economic growth will probably ease to 8 percent this
\nyear from an estimated 9.3 percent in 2004, according to the
\nmedian estimate of 10 economists surveyed by Bloomberg last week.
\nThat would be the slowest pace of expansion since 2001.<\/p>\n
Malaysia's fourth-quarter economic growth probably slowed to 6
\npercent from a year earlier, the institute said. The effect of
\nthe Dec. 26 tsunami on the economy will be \"no more than
\nmarginal,\" it said.<\/p>\n
The tsunami killed 69 people in Malaysia after slamming into
\nnorthern states including Penang and Kedah.<\/p>\n
Economic growth slowed to 6.8 percent in the third quarter
\nafter expanding a revised 8.2 percent in the previous three
\nmonths, the central bank said in November.<\/p>\n
Malaysia probably won't change the ringgit's peg to the U.S.
\ndollar this year because China isn't likely to scrap its own
\nfixed currency anytime soon, the institute's Executive Director
\nMohamed Ariff Kareem told reporters in Kuala Lumpur.<\/p>\n
He said maintaining the six-year-old peg is a \"political
\ndecision.\"<\/p>\n
In its report, the institute said Malaysia's government should
\nreview the currency peg now rather than later because of the
\nslowdown in global economic growth.<\/p>\n
\"With the global economic prospects getting less encouraging
\nin the next two years, and the expectations that the dollar slide
\nwill go on further, it appears that right about now it's as good
\na time for the monetary authorities to consider the dismantling
\nof the peg,\" the think-tank said in the report.<\/p>\n
Malaysia's ringgit was pegged to stem capital flight during
\nthe Asian financial crisis.<\/p>\n
The decision gave the central bank room to cut interest rates,
\nhelping the economy recover from its worst recession in 41 years.
\nChina's currency, the yuan, was fixed at about 8.3 to the dollar
\nin 1995.<\/p>\n
The institute's consumer sentiment index fell 4.6 points, to
\n109.3 in the fourth quarter from 113.9 in the third quarter.<\/p>\n
Its business confidence index fell 12.9 points to 97.3 in the
\nfourth quarter from 110.2 in the third quarter, affected by
\nfactors such as an expected slowdown in the global and domestic
\neconomy, and higher energy costs and toll rates, it said.<\/p>",
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