Mahathir sees Malaysian economy growing in 2001

Mahathir sees Malaysian economy growing in 2001

Reuters, Kuala Lumpur

Malaysia will record positive gross domestic product (GDP) growth for the full year in 2001, Prime Minister Mahathir Mohamad said on Thursday, despite forecasts of a contraction by some analysts.

GDP shrank 1.3 percent year-on-year in the third quarter, the first contraction in over two years, because of a slump in electronics exports.

Asked whether the country will post positive growth for the full year, Mahathir said: "I think we can."

Malaysia recently cut its official GDP growth forecast for 2001 to 1.0-2.0 percent from 5.0-6.0 percent.

"We need to grow just a little bit in the fourth quarter in order to achieve positive growth for the year," Mahathir told reporters in parliament.

The economy grew 0.5 percent in the second quarter and 3.1 percent in the first quarter.

HSBC Fixed Income Research said late last month it expected the country's economy to contract in the fourth quarter, but rebound in 2002.

It did not give a forecast for fourth-quarter GDP but projected a contraction of 0.2 percent for the full year versus 2000's blistering 8.5 percent.

Mahathir said consumption is expected to rise in the fourth quarter while exports improved in October. He added that growth has to be driven by domestic activities given that the global economy was expected to experience a slowdown.

"What the country needs to register growth for the whole year are higher consumption and exports," he said.

Signs of a recovery in tourist arrivals, which had slumped following the September 11 attacks on the United States, will also help underpin fourth quarter GDP growth.

"In many areas, there are positive signs. So I'm hopeful that there will be growth," he said.

But the prime minister said growth in the fourth quarter was unlikely to match that of the final quarter of last year when GDP grew 6.3 percent year-on-year.

"We must remember in the fourth quarter last year, we achieved a very high growth rate. It's very difficult to achieve the same growth rate," he said.