Thursday, January 22, 2004
Malaysia economic growth for 2004 forecast at 5.7%
Reuters Kuala Lumpur, January 20
Malaysia's economy will grow 5.7 per cent this year fuelled by electronics, corporate profit hikes, equity market bullishness and election spending, the Malaysian Institute of Economic Research (MIER) said on Tuesday.
The leading think tank also set out three possible triggers for a review of the ringgit currency peg -- a revaluation of the Chinese yuan, the dollar hitting 1.40 to the euro and the yen reaching 100.
The durability of the peg, fixed at 3.80 per dollar in 1998 to ward off the Asian currency crisis, remains one of the main risk factors for investors in Malaysia.
"I'm not expecting any peg review unless and until there is strong pressure, some kind of breaking point, where the government probably will consider some kind of review," MIER executive director Mohamed Ariff Abdul Kareem told a news conference.
MIER held its 2004 estimate for gross domestic product (GDP) unchanged and forecast last year's growth at 4.9 per cent and next year's at 6.2 per cent.
"The upswing in the electronics sector will buoy exports furtler," it said in its quarterly economic report, which predicted growth would spur foreign direct investment (FDI).
"A healthier global economy will also lead to steadier inflows of FDI," it added.
The government has said 2003 GDP beat 4.6 per cent but without yet giving details and predicts growth this year at between 5.5 per cent and six per cent.
The central bank is not due to release official figures until the end of next month, but MIER put fourth quarter GDP growth at 5.1 to 5.2 per cent. Trade-dependent Malaysia's exports grew 7.4 per cent in the year ended November, topping market expectations thanks to record sales to China. It posted a trade surplus of 6.31 billion ringgit ($1.7 billion) for the month, when imports rose 6.2 per cent from a year earlier.
The key market for Malaysia's electronics and electrical goods is the United States, although its share of sales is slipping.
© Hindustan Times Ltd. 2004.