Growth forecast achievable: economists
(AFP) Prime Minister Dr Mahathir Mohamad's forecast of 3.0 percent growth for the economy this year was realistic and achievable, economists said today.
But concerns remained over the speed of implementation of projects tied to the government's stimulus package and over external factors like the recovery in the US economy and the weak yen, they said.
Mahathir, who is also finance minister, Tuesday predicted gross domestic product (GDP) to grow 3.0 percent this year - down from an earlier official forecast of 4.0-5.0 percent growth.
The premier said the economy was estimated to grow 0.5-1.0 percent in 2001, down from an earlier government projection of 1.0-2.0 percent.
The government last year unveiled two fiscal packages totaling RM7.3 billion to boost the economy.
Economists were more optimistic about the outlook, projecting growth of 3.3-4.2 percent this year amid expectations of domestic-driven growth in the first half and export recovery in the second.
"The three percent growth is realistic. It looks achievable," HLG Research chief economist Lee Heng Guie told AFX-Asia , an AFP -owned financial news service.
Lee expected stronger growth in the second half on the back of improved exports and an expected US economic recovery. He pegged GDP growth at 3.3 percent this year.
Domestic-driven
SBB Securities economist Manokaran Mottain forecast 4.0 percent GDP growth this year.
"In the first half, we will get some growth from the government's fiscal spending as well as consumer spending, and we are hoping for a recovery in the second half from the external sector," he said.
Kay Hian Research economist Tan Kang Yong concurred that the initial recovery would be domestic-driven, with exports likely to improve from the second quarter. He forecast 4.2 percent growth for 2002.
"We see positive (export) growth coming in the second quarter. It should be a gradual recovery," Tan said.
But there were downside risks to their forecasts, he said.
"For this year, there is still risk. People think the US will be coming out from recession in the second half," Lee said.
Global currency fluctuations, particularly the yen's movements, was another factor that could affect the economy, he added.
Another economist said a recent report that more than 85 percent of the country's computer laboratories for schools have not been completed despite a timetable extension has raised concerns over the implementation of other projects crucial for economic recovery.
"What does this show? (What) is going to happen to the fiscal packages?" he said.
Other downside risks would include a possible war between India and Pakistan and a possible repeat of the September 11 events, he added.
Fiscal measures
Mahathir, in a televised interview with the official Bernama news agency yesterday, predicted economic growth would accelerate to three percent this year after a sharp slowdown in 2001.
"We believe that we may achieve a growth of 0.5 percent to 1.0 percent in 2001 and for 2002 there is a possibility of a growth of about 3.0 percent," he said.
Mahathir, who is also finance minister, said the September 11 attacks on the United States had a minimal effect on the country's goal of achieving industrialised nation status by 2020.
But concerns remained over the speed of implementation of projects tied to the government's stimulus package and over external factors like the recovery in the US economy and the weak yen, they said.
Mahathir, who is also finance minister, Tuesday predicted gross domestic product (GDP) to grow 3.0 percent this year - down from an earlier official forecast of 4.0-5.0 percent growth.
The premier said the economy was estimated to grow 0.5-1.0 percent in 2001, down from an earlier government projection of 1.0-2.0 percent.
The government last year unveiled two fiscal packages totaling RM7.3 billion to boost the economy.
Economists were more optimistic about the outlook, projecting growth of 3.3-4.2 percent this year amid expectations of domestic-driven growth in the first half and export recovery in the second.
"The three percent growth is realistic. It looks achievable," HLG Research chief economist Lee Heng Guie told AFX-Asia, an AFP-owned financial news service.
Lee expected stronger growth in the second half on the back of improved exports and an expected US economic recovery. He pegged GDP growth at 3.3 percent this year.
Domestic-driven
SBB Securities economist Manokaran Mottain forecast 4.0 percent GDP growth this year.
"In the first half, we will get some growth from the government's fiscal spending as well as consumer spending, and we are hoping for a recovery in the second half from the external sector," he said.
Kay Hian Research economist Tan Kang Yong concurred that the initial recovery would be domestic-driven, with exports likely to improve from the second quarter. He forecast 4.2 percent growth for 2002.
"We see positive (export) growth coming in the second quarter. It should be a gradual recovery," Tan said.
But there were downside risks to their forecasts, he said.
"For this year, there is still risk. People think the US will be coming out from recession in the second half," Lee said.
Global currency fluctuations, particularly the yen's movements, was another factor that could affect the economy, he added.
Another economist said a recent report that more than 85 percent of the country's computer laboratories for schools have not been completed despite a timetable extension has raised concerns over the implementation of other projects crucial for economic recovery.
"What does this show? (What) is going to happen to the fiscal packages?" he said.
Other downside risks would include a possible war between India and Pakistan and a possible repeat of the September 11 events, he added.
Fiscal measures
Mahathir, in a televised interview with the official Bernama news agency yesterday, predicted economic growth would accelerate to three percent this year after a sharp slowdown in 2001.
"We believe that we may achieve a growth of 0.5 percent to 1.0 percent in 2001 and for 2002 there is a possibility of a growth of about 3.0 percent," he said.
Mahathir, who is also finance minister, said the September 11 attacks on the United States had a minimal effect on the country's goal of achieving industrialised nation status by 2020.
"Maybe they have some effect but we hope that this is confined to 2001. As we already know that in 2000, we achieved better growth at more than 8.0 percent and we had hoped that we would grow in the same manner in 2001," he said.
He added that the country had succeeded in maintaining growth because it did not adhere to solutions proposed by the International Monetary Fund but decided to adopt its own approach.
Malaysia pegged the ringgit on September 1, 1998, at RM3.80 to the US dollar during the middle of the Asian financial crisis and imposed selective capital controls to insulate the domestic economy from currency speculators.
The government in November cut its growth forecast for 2001 for a second time to 1.0-2.0 percent, and has introduced a range of fiscal measures to boost consumer spending.
Malaysia last plunged into recession in 1998 but it rebounded the following year and recorded 8.5 percent growth in 2000.
