No recession for Malaysia: Mahathir

No recession for Malaysia: Mahathir

KUALA LUMPUR (AFP): Malaysia is not expected to plunge into another recession this year despite the U.S. slowdown, Prime Minister Mahathir Mohamad said on Monday.

He told a press conference that "as far as we can read, the figures do not show that we are going into recession."

The premier said Malaysia's economy was "much more diversified" than that of neighbouring Singapore, which entered a technical recession after reporting two consecutive three month periods of quarter-on-quarter decline.

"We don't depend entirely on the electronics industry. We have palm oil, we have also some services, we have a lot of fabrication companies.

"We have quite a lot of other businesses, so we will not be as much affected as Singapore is because of the downturn in the electronics industry..." Mahathir said.

Malaysia last plunged into a recession in 1998 but has since rebounded. It is however feeling the effects of the U.S. slowdown, as almost 21 percent of its exports go to the United States.

The government in March revised downwards its economic growth forecast this year to between five and six percent, from seven percent previously. But most analysts predict the economy will grow by less than half the 8.5 percent rate of last year.

Mahathir said the budget for 2002, to be tabled in parliament in October, would continue to be in deficit for the fifth year in a row.

"It won't be a very big deficit but we do have the money... companies are making good profits despite the downturn... the government expect to collect quite a lot of corporate tax, income tax revenue," he said.

Malaysia would still have sufficient funds to pump-prime the economy even if the government reduces import duty on goods, he added.

The budget for 2001 unveiled last year forecast an overall deficit of 16.14 billion ringgit (4.25 billion dollars), or 4.9 percent of gross national product.

Mahathir, who is also acting finance minister following Daim Zainuddin's resignation on June 1, said he was still looking for a suitable candidate to replace Daim.

"I have been looking around (but) still no applicant. Some have actually applied but I have not considered (them) yet," he added.