Sign up | Log in



February 28, 2009

Malaysia: Pressure on spending rises as slowdown continues

Malaysia's economic growth slowed to its weakest pace in eight years in the fourth quarter, hit by plunging exports as the country's finance minister warned that there were constraints on extra spending, reported Reuters.

Gross domestic product (GDP) rose 0.1 percent in the final quarter of 2008 from a year earlier, data showed on Friday, undershooting expectations for a 1 percent gain by economists in a Reuters poll.

It also marked a sharp slowdown from the third quarter when GDP grew 7.3 percent from a year earlier. The data comes hard on the heels of a surprise 50 basis point cut in interest rates by the central bank this week to 2 percent and as the country prepares for a new fiscal boost to be announced on March 10.

"The fourth quarter numbers the raised the risks to the Malaysian economic outlook in 2009 with a very high probability of an outright recession," said Bank Islam Economist Azrul Azwar Ahmad Tajudin.

For the full year 2008, annual growth was 4.6 percent, compared with 6.3 percent in 2007.

Deputy Prime Minister Najib Razak who is also finance minister said that the country was readying a new round of spending to save jobs and boost domestic demand although he appeared to downplay the prospect of a big spending spree.

"We will do something that will help the domestic economy, we will do whatever we can within our limitations," said Najib, who will become prime minister in March.

"But of course, one has to be mindful of not only this year, but through to 2010 and beyond as well," he said, according to state news agency Bernama.

Malaysia's finances are constrained by the fact that the country has been running big budget deficits for a while and in 2008 it was forecast at 4.8 percent of GDP. Some 40 percent of government revenues come from oil, whose price has plunged by over two-thirds.

Malaysia's slowdown reflects the broader trend in the region, which has been hammered by slumping demand for its exports. So far, Japan, Singapore, South Korea and Taiwan have slipped into recession.

Earlier on Friday, India said its economy in the December quarter grew a slower-than-expected 5.3 percent, its slowest in six years.

Many economists see Malaysia heading for its first annual recession since the Asian financial crisis in 1997-98 as exports, worth 100 percent of GDP, continue to shrink.

A senior minister said recently exports could fall 4 percent in 2009 while most economists see double-digit drops.
Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited

submit your comment in the box below




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2020 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand