U.S. slowdown hurting Malaysia's growth: Mahathir

U.S. slowdown hurting Malaysia's growth: Mahathir

KUALA LUMPUR (AP): Prime Minister Mahathir Mohamad said that
the U.S. economic slowdown is already being felt in Malaysia,
where the manufacturing sector depends heavily on exporting
electrical goods to the American market.

Mahathir told reporters that Malaysia's economic growth in the
first quarter may not meet expectations.

"I believe it is not as good as we would like it to be,"
Mahathir said. "The effects of the recession have been felt quite
early."

Malaysia's central bank recently projected that the economy
will expand 5 percent to 6 percent this year, down from previous
forecasts of 7 percent. After an 8.5 percent expansion in 2000,
the slower growth is expected to mute the inflation rate.

The Kuala Lumpur Stock Exchange's benchmark Composite Index
closed Monday at 581.37, unchanged from Friday, in thin trading.

The national statistics office earlier reported that
manufacturing sales rose in February compared to January, but the
number of employees fell.

Sales in February increased 1.2 percent from January and were
up 11.41 percent compared to February 2000, reaching 26.3 billion
ringgit (US$6.9 billion).

The number of employees in manufacturing declined by 0.3
percent to 1.04 million, down from 1.05 million in January,
though compared to a year earlier the number of employees was up
6.8 percent.

Economists are analyzing the February data to see what effects
the economic slowdown in the United States and slowing global
demand will have for Malaysia's electronic goods and components.

More than 50 percent of Malaysia's exports comprise
electronics. The United States is this Southeast Asian country's
largest trading partner.

The March consumer price index rose 1.5 percent year-on-year,
but fell 0.2 percent from February, continuing a trend of
manageable inflation, the statistics agency said.

The data was marginally slower than analysts' expectations of
a 1.7 percent year-on-year increase, following an acceleration of
1.6 percent in February.

Mahathir also said Malaysia will consider fixing a new ringgit
exchange rate if it experiences a sustained 20 percent fall or
rise against regional currencies.

There has been market speculation that the peg of 3.80 to the
dollar -- fixed in September 1998 -- may be changed as other
regional currencies slump, making their exports more competitive
in dollar terms.

Mahathir was asked at a press conference Monday if his earlier
comments on a 20 percent movement had been accurately reported.

"They are still accurate but not of course if it (movement)
happens for one day," he said.

"But if it is sustained and the value of the ringgit is too
strong by 20 percent or too weak by 20 percent, we will consider
determining a new exchange rate.