MIER upgrades Malaysia's economic growth forecast
MIER upgrades Malaysia's economic growth forecast
M.Jegathesan, Agence France-Presse, Kuala Lumpur
Malaysia's economy is likely to grow at a better-than-expected
6.7 percent this year on the back of an improved global outlook,
the Malaysian Institute of Economic Research (MIER) said on
Tuesday.
"Malaysia's economic prospects are brightening. All engines
are firing," MIER's executive director Mohamed Ariff said after
presenting a report by the independent think-tank.
"Major sectors -- manufacturing, tourism, commodities and
property are expanding favorable. We expect robust growth," he
said.
In January, MIER said economic growth for 2004 would be 5.7
percent.
MIER said Malaysia's economy was clearly gaining momentum, in
line with global trends led by growth in the U.S. economy.
"The faster economic growth will drive Malaysia's exports
higher and hopefully this will also translate into higher FDI
(foreign direct investment) inflows," it said.
Electronics and electrical goods are among the country's
largest exports.
Malaysia is the world's largest exporter of palm oil, with
China and India being key markets while prices are at record
highs.
MIER said the private sector would be the growth engine for
the domestic economy, with interest rates likely to remain
generally low and stable.
Business confidence and consumer sentiment in the country are
also getting more upbeat, it said.
The central bank last month raised its 2004 economic growth
forecast for Malaysia to 6.0-6.5 percent, from a 5.56.0 percent
projection made earlier in the year.
However, MIER said it cut its forecast for Malaysia's 2005
growth to 5.5 percent from 6.2 percent, mainly due to an expected
slowdown in the U.S. economy, which would normally be weaker
after an election year.
As for the peg of the ringgit currency at 3.8 to the dollar,
MIER said the effect was a 6.7 percent depreciation as of
February 2004 compared to the same month last year, and a six
percent drop compared to September 1998, when it was first
pegged.
"This suggests that the ringgit may not have undergone any
serious misalignment," it said, adding that any attempt to end
the peg would have to be done unexpectedly to avoid unhealthy
speculation.
Prime Minister Abdullah Ahmad Badawi on Monday brushed aside
speculation that Malaysia would review the peg.
"Who is speculating? They can go on speculating. We have no
plans to review the ringgit peg," Abdullah, who is also the
finance minister, told reporters.
The central bank has said that a weaker dollar has benefited
exports and had only minimum impact on imported inflation since
less than 10 percent of Malaysia's imports are denominated in
currencies other than the dollar.