MIER: 2008 growth may beat forecast

 

MALAYSIA'S economic growth may exceed the government’s forecast this year, supported by domestic demand and service industries, the Malaysian Institute of Economic Research said.

Southeast Asia’s third-largest economy may expand 5.5 per cent in 2008, the MIER said today in a statement in Kuala Lumpur.

That’s more than the group’s 5.3 per cent forecast made in October. Growth will slow to 3.4 per cent next year before picking up to 3.8 per cent in 2010, the statement said.

“Domestic demand will be propped up by fiscal pump-priming, providing a partial cushion to the uncertain global economy,” the MIER said. “The services sector will be the pillar of strength amid a weak manufacturing sector.”

The global recession, triggered by a housing slump in the US, Malaysia’s largest trading partner, has eroded demand for the Asian country’s manufactured exports and the value of its overseas crude and palm oil sales. The government expects growth of 5 per cent this year, the weakest pace since 2005.

“Chances are the forecasts would be downgraded in the near future,” the partially government-funded research institute said in today’s statement. “The downside risks of further fallout from the financial woes have amplified. Unpleasant possibilities are not totally excluded.”

Malaysia’s exports will fall 1.8 per cent in 2009 as more developed countries enter recession, according to presentation material given to reporters at the MIER’s national economic outlook conference in Kuala Lumpur.

Inflation will slow to 3 per cent in 2009 from 5.6 per cent this year, the institute said. The unemployment rate will rise to 4.5 per cent in 2009, it said. - Bloomberg