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Malaysia’s economy may contract 5%
Malaysia expects a deeper recession this year, with its export-dependent economy likely to shrink between 4 and 5 percent, the Associated Press quoted Prime Minister Najib Razak as saying Thursday.
The government had previously forecast the economy to contract 1 per cent in Malaysia's first recession since 1998.
Najib, who is also finance minister, said the government had to revise the figure due to 'very weak external demand' that has hit the country's exports.
Gross domestic product slumped by a sharper-than-expected 6.2 percent in the first quarter from a year earlier, as exports plummeted 25 percent and private investment fell 26 percent, he said. The economy also shrank from the previous quarter, marking its first quarterly contraction in eight years.
Najib said the new GDP forecast was 'realistic' unless the global financial crisis becomes even more protracted.
The central bank has said the economy's slump in the first quarter was largely due to a 17.6 percent contraction in manufacturing, as electrical and electronics exports plunged amid weak global demand. GDP shrank 7 percent from the fourth quarter.
Construction was the only sector of the economy to expand in the first quarter, growing 0.6 percent due to new commercial and residential developments.
Najib said the government would accelerate the implementation of projects under fiscal stimulus measures totaling 67 billion ringgit. He said the government plans to further loosen guidelines for foreign investors under its economic liberalisation plans, but didn't say when this will be announced. Malaysia has recently liberalised part of its services sector to boost the economy.
Najib reiterated that Malaysia's banking sector was 'not only healthy but resilient and flushed with liquidity'. Moody's Investors Services recently placed nine Malaysian banks on review for possible downgrade of their deposit and debt ratings.
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