Malaysia's current account deficit widened in '93

Malaysia's current account deficit widened in '93

KUALA LUMPUR (Kyodo): Malaysia's balance of payments deficit in its current account widened for the fourth consecutive year in 1993 to 5.4 billion ringgit (US$1.9 billion) from 1992's 4.2 billion ringgit ($1.5 billion), the central bank said Thursday.

It said the perennially red services account, which rose to 14.4 billion ringgit from 13.0 billion ringgit in 1992, was again too large for the 8.8 billion ringgit merchandise surplus to effect any reduction in the current account deficit.

Not even the slight improvement in the services deficit in 1992 could be sustained in 1993 because of continued high net investment income outflows, Bank Negara Malaysia said in its annual report.

The merchandise surplus was up only slightly from 1992's 8.6 billion ringgit because of an 18.5 percent surge in imports valued at 109.4 billion ringgit in 1993.

The sharp rise in imports, which had grown only 1.7 percent in 1992, reflected the pickup in domestic demand caused by the rapidly expanding industrial sector.

Export growth also doubled to 17.1 percent, valued at 118.2 billion ringgit, from 1992's 9.4 percent, due chiefly to the remarkable performance of manufactured exports, which shot up 26 percent.

Growth

The bank said Malaysia's economy posted higher-than-expected growth of 8.5 percent in 1993, buoyed by strong exports and revived domestic demand.

It also attributed the improved performance to impressive growth by manufacturing, which expanded to 13.0 percent from 10.5 percent in 1992, as well as expansion in the construction and services sectors.

It said 1992 saw some consolidation in the economy's growth, with gross domestic product (GDP) revised to 7.8 percent from an earlier 8.0 percent forecast.

Bank Governor Jaffar Hussein described 1993 as an "outstanding" year for Malaysia, which saw an unprecedented sixth consecutive year of sustained, rapid growth of about 8 percent.

The bank said Malaysia is expected to experience another good year in 1995 with 8.4 percent GDP growth but warned of persisting inflationary pressures related to a pickup in consumer spending.

Public- and private- sector spending pushed domestic demand growth in 1993 to 6.0 percent, from 1992's 2.5 percent, following rises in consumer expenditure, private investment and infrastructural outlays.

Manufacturing, scoring its seventh year of double-digit growth, remained the biggest contributor to GDP, accounting for 30.1 percent of the total, due chiefly to improved growth in domestic- and export-oriented industries.

The agriculture sector's growth slowed to 3.9 percent, from 4.3 percent in 1992, because of declines in rubber, logs and cocoa production, while mining output contracted 1.5 percent following cuts in crude oil and tin output, after previously growing 1.7 percent.

Inflation shrank further to 3.6 percent, from 4.7 percent in 1992, as a fifth consecutive year of tight government monetary policies continued to mop up excess liquidity and prevent price rises.