M'sia economy growth on track
Wednesday, July 18, 2007
MALAYSIA is on track to meet its six per cent economic growth target for 2007, the government said yesterday, but a leading think tank forecast growth would fall short due to weak export demand.
Public spending, strong domestic demand and policy changes aimed at spurring business activity would help gross domestic product grow at a faster clip in 2007 than last year's 5.9 per cent, Deputy Finance Minister Ng Yen Yen said.
Healthy foreign exchange reserves and a strong financial sector would help the economy weather any risks, such as a catastrophic adjustment to global imbalances, she said.
However, the Malaysian Institute of Economic Research, an independent think tank, forecast that the economy would only grow by 5.7 per cent in 2007. That was a slight upward revision to its earlier projection of 5.6 per cent.
"Although the external factors appear soft at this point, there are some mitigating factors that can potentially counteract the negative factors," it said in a quarterly report yesterday.
"The positive points include the relatively lower inflation rate, good progress in the Ninth Malaysia Plan projects, higher investment approvals, and the recent policy initiatives to relax foreign exchange rules and scrap the real property gains tax." The Ninth Malaysia Plan is a US$54 billion ($82 billion), five-year state development blueprint.
A Reuters poll of economists in June forecast that economic growth would slow to 5.7 per cent this year, dampened by weak demand for the country's electronics exports.
Neighbouring Singapore's economy is officially expected to expand 5-7 per cent this year while Indonesia has forecast gross domestic product growth of more than 6 per cent.
The think tank, whose reports are closely followed by financial markets, also forecast a stronger ringgit by the year-end and stable interest rates.
The ringgit was expected to strengthen to 3.30-3.35 per US dollar by the year-end and touch RM3 to the dollar in a couple of years, reflecting a healthy economy and a weaker US dollar, Mohamed Ariff, the institute's head, said.
Reuters
Public spending, strong domestic demand and policy changes aimed at spurring business activity would help gross domestic product grow at a faster clip in 2007 than last year's 5.9 per cent, Deputy Finance Minister Ng Yen Yen said.
Healthy foreign exchange reserves and a strong financial sector would help the economy weather any risks, such as a catastrophic adjustment to global imbalances, she said.
However, the Malaysian Institute of Economic Research, an independent think tank, forecast that the economy would only grow by 5.7 per cent in 2007. That was a slight upward revision to its earlier projection of 5.6 per cent.
"Although the external factors appear soft at this point, there are some mitigating factors that can potentially counteract the negative factors," it said in a quarterly report yesterday.
"The positive points include the relatively lower inflation rate, good progress in the Ninth Malaysia Plan projects, higher investment approvals, and the recent policy initiatives to relax foreign exchange rules and scrap the real property gains tax." The Ninth Malaysia Plan is a US$54 billion ($82 billion), five-year state development blueprint.
A Reuters poll of economists in June forecast that economic growth would slow to 5.7 per cent this year, dampened by weak demand for the country's electronics exports.
Neighbouring Singapore's economy is officially expected to expand 5-7 per cent this year while Indonesia has forecast gross domestic product growth of more than 6 per cent.
The think tank, whose reports are closely followed by financial markets, also forecast a stronger ringgit by the year-end and stable interest rates.
The ringgit was expected to strengthen to 3.30-3.35 per US dollar by the year-end and touch RM3 to the dollar in a couple of years, reflecting a healthy economy and a weaker US dollar, Mohamed Ariff, the institute's head, said.
Reuters
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