Recession hits Malaysia

Recession hits Malaysia

KUALA LUMPUR, Malaysia (AP): Shedding wishful thinking about the once roaring economy, Malaysia admitted yesterday that it would slip into recession this year, confirming the worst fears of financial analysts.

The gross domestic product would contract by 1 percent to 2 percent in 1998, Finance Minister Anwar Ibrahim said.

Malaysia, once regarded as the fastest growing among the Asian tiger economies, contracted by 1.8 percent in the first quarter of this year, compared with 6.9 percent growth in the previous quarter. Results of the second quarter have not been announced.

Until now, the government had maintained that it would be able to achieve GDP growth of between 2 percent and 3 percent for 1998. Even last week, Anwar had said Malaysia would have to revise its growth target but would try to halt a recession.

Anwar said two government packages totaling 12 billion ringgit (US$3 billion) in June had helped cushion the economic fall. He said there would be more such measures.

"Based on the economic performance in the first quarter and the latest economic indicators, there is a big possibility that the GDP contraction will increase if there are no new measures," Anwar told Parliament on the opening day of a new session.