Malaysia's 3% growth forecast 'realistic'

Malaysia's 3% growth forecast 'realistic'

Agence France-Presse, Kuala Lumpur

Prime Minister Mahathir Mohamad's forecast of 3.0 percent growth for the Malaysian economy this year was realistic and achievable, economists said Wednesday.

But concerns remained over the speed of implementation of projects tied to the government's stimulus package and over external factors like the recovery in the U.S. economy and the weak yen, they said.

Mahathir, who is also finance minister, Tuesday predicted gross domestic product (GDP) to grow 3.0 percent this year -- down from an earlier official forecast of 4.0-5.0 percent growth.

The premier said the economy was estimated to grow 0.5-1.0 percent in 2001, down from an earlier government projection of 1.0-2.0 percent.

The government last year unveiled two fiscal packages totaling 7.3 billion ringgit (US$1.9 billion) to boost the economy.

Economists were more optimistic about the outlook, projecting growth of 3.3-4.2 percent this year amid expectations of domestic-driven growth in the first half and export recovery in the second.

"The three percent growth is realistic. It looks achievable," HLG Research chief economist Lee Heng Guie told AFX-Asia, an AFP- owned financial news service.

Lee expected stronger growth in the second half on the back of improved exports and an expected U.S. economic recovery. He pegged GDP growth at 3.3 percent this year.

SBB Securities economist Manokaran Mottain forecast 4.0 percent GDP growth this year.

"In the first half, we will get some growth from the government's fiscal spending as well as consumer spending, and we are hoping for a recovery in the second half from the external sector," he said.

Kay Hian Research economist Tan Kang Yong concurred that the initial recovery would be domestic-driven, with exports likely to improve from the second quarter. He forecast 4.2 percent growth for 2002.

"We see positive (export) growth coming in the second quarter. It should be a gradual recovery," Tan said.

But there were downside risks to their forecasts, he said.

"For this year, there is still risk. People think the U.S. will be coming out from recession in the second half," Lee said.

Global currency fluctuations, particularly the yen's movements, was another factor that could affect the economy, he added.