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.