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NEWS UPDATES 4 December 2009

Malaysia has no need for third stimulus package - experts

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Malaysia does not need a third stimulus package even if the US economy goes into a relapse next year, the StarBiz reported, quoting HSBC Singapore senior Asian economist for global research, Robert Prior-Wandesforde.

“I think there’s enough stimulus in the pipeline. We haven’t seen the full effects of the current stimulus as it always takes time to get the infrastructure and projects in place,” he told reporters on the sidelines of the Malaysian Capital Market Summit organised by the Asian Strategy & Leadership Institute (ASLI) yesterday.

Prior-Wandesforde, who had earlier forecast the Malaysian economy to grow by 6.8% next year, said his projection was achievable even without the existing stimulus packages.

“I think Malaysia can achieve the 6.8% growth even if the existing stimulus packages are not delivered in full. In fact, I think there is a need to pull back some of the measures because the deficit has become quite high,” he said.

The Government has so far introduced two stimulus packages totalling RM67bil, with the first package at RM7bil in November last year and the second stimulus package worth RM60bil in March this year to cover a two-year period.

The Government is targeting a budget deficit of 5.6% of gross domestic product (GDP) for next year.

Earlier this week, the Malaysian Institute of Economic Research said Malaysia might need a third stimulus package of at least RM8bil after it exhausted the existing ones by May next year.

It has been reported that so far, Malaysia has allocated some RM22bil for the first two stimulus packages.

The Government has forecast a GDP growth of 2% to 3% for 2010. Prior-Wandesforde said a growth of 6.8% was achievable due to improved domestic consumption, exports and the impact from the existing stimulus packages.


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