KL economic growth to slow down: MIER

KL economic growth to slow down: MIER

Agence France-Presse
Kuala Lumpur

The Malaysian Institute of Economic Research (MIER) on Tuesday
cut its 2003 economic growth forecast for Malaysia due to a fall
in tourists following the outbreak of SARS.

MIER executive director Mohamed Ariff said it reduced its
growth forecast for Malaysia to 3.7 percent from an earlier
projection of 5.7 percent.

SARS has had an adverse impact on tourism, an industry which
has helped boost the country's economy in the past few years, he
was cited as saying by the official Bernama news agency. Tourism
is Malaysia's second largest foreign exchange earner after
manufacturing.

Malaysia has frozen visas for visitors from China, Taiwan,
Vietnam and Canada to curb the spread of the SARS virus.

On Monday, ING Financial Markets trimmed its 2003 forecast for
Malaysia to 4.0 percent from 5.0 percent due to the outbreak of
the deadly Severe Acute Respiratory Syndrome (SARS).

Azrul Azwar, an economist at MIDF Sisma Securities recently
said that tourism arrivals would drop to 12.9 million this year
from 13.3 million in 2002.

"This is a drop from our initial forecast of 13.56 million
tourists for 2003," he said.

As the country's second largest foreign exchange earner, the
dip in visitors would badly affect the economy, he added.

Ariff said the threat of SARS posed a more serious threat to
growth than the Iraq war.

The 3.7 percent forecast was realistic and achievable taking
into consideration a stimulus package to be announced by the
government soon, he said.

But Ariff said the new forecast for Malaysia was based on the
assumption there would be no U.S. reprisal on Malaysia's war
stance and that the SARS epidemic would subside.

Government officials say the stimulus package aimed to bolster
the economy was expected to be announced in May.

MIER also revised downward its 2004 economic forecast to 5.4
percent from 6.3 percent amid global uncertainties.

The central Bank Negara Malaysia, in its 2002 annual report,
warned gross domestic product (GDP) growth could slide even lower
if global economic uncertainties persist.

Bank Negara governor Zeti Akhtar Aziz said the new forecast,
up slightly from 4.2 percent growth recorded last year, was in
line with expectations in other Asian economies for the pace of
growth last year to be sustained into 2003.