Malaysia's growth seen moderating<\/p>\n
KUALA LUMPUR (Reuters): Malaysia's economy grew 6.5 percent
\nyear-on-year in the fourth quarter of 2000, expanding a
\nblistering 8.5 percent during the whole year spurred by exports
\nof electronics and semiconductors.<\/p>\n
But the government and economists expect growth to moderate in
\n2001 because of an expected slowdown in the United States, a key
\ntrading partner, and regional sluggishness led by Japan.<\/p>\n
Malaysia has trimmed its economic growth forecast to 5.8
\npercent in 2001 from an earlier projection of 7.0 percent.<\/p>\n
But private economists are less optimistic and expect GDP to
\nexpand by only 5.2 percent in 2001.<\/p>\n
The statistics showed the economy grew 0.7 percent in the
\nOctober-December quarter, versus the preceding quarter.<\/p>\n
Malaysia, along with South Korea, has recovered from deep
\nrecession faster than other regional economies following the
\nAsian economic crisis of 1997-98.<\/p>\n
"Growth has largely been due to manufacturing and exports. If
\nyou take that out it is barely three percent," said Eddie Lee,
\nregional economist at Vickers Ballas.<\/p>\n
"The regional slowdown led by the contraction in manufacturing
\nin South Korea, Taiwan and Japan will hit Malaysia hard," Lee
\nsaid.<\/p>\n
Signs of an inventory build up, lay offs, slowing exports of
\nelectronics and semiconductors, depressed consumer and business
\nsentiment are all worrying economists.<\/p>\n
Malaysia's exports dipped 11.4 percent year-on-year to 30.2
\nbillion ringgit ($8 billion) in December, the first monthly fall
\nsince February 1999, while industrial output the same month rose
\n15.1 percent.<\/p>\n
"By comparing these two figures, we can conclude that
\nproduction growth is outpacing sales and unsold products are
\ngradually building up in warehouses," said Kevin Ng, economist at
\nABN AMRO.<\/p>\n
"I expect the trend to continue this year particularly as we
\nexpect slower export orders," Ng said.<\/p>\n
As inventories begin to pile up in Malaysian warehouses,
\ncompanies are laying off workers to cut costs.<\/p>\n
Latest data from the government's Economic Planning Unit show
\n2,601 jobs were lost in December, the highest since January 2000.<\/p>\n
"The figure is very small compared to the total labor force
\nbut nonetheless the signs are not encouraging," said an economist
\nat a local investment bank.<\/p>\n
A slow down in domestic consumption and investment, dashing
\nhopes that the two sectors would counter the fall in external
\ndemand, has worsened the economic gloom.<\/p>\n
"The downturn has yet to run its course. It can be deep and
\nswift," Lee said.<\/p>\n
Growing dissent within Prime Minister Mahathir Mohamad's
\nruling United National Malays Organization and a resurgent
\nopposition led by Parti Islam se-Malaysia has raised questions
\nover the ruling alliance's long-term political future.<\/p>\n
Another risk factor looming on foreign investor radars is
\nspeculation over whether Malaysia should repeg its currency.<\/p>\n
"The government should provide a road map on capital
\ncontrols," said Manokaran Mottain, economist at SBB Securities.<\/p>",
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