Economic growth to slow next year
Published: Oct 24, 2007 4:37 PM | Updated: Jan 29, 2008 6:21 PM
Malaysia's leading forecaster cut its 2008 growth estimate to 5.4 percent from 5.8 percent today, citing a shaky outlook for the United States and the global economy.
Malaysia's leading forecaster cut its 2008 growth estimate to 5.4 percent from 5.8 percent today, citing a shaky outlook for the United States and the global economy.
The independent Malaysian Institute of Economic Research (MIER) maintained its forecast of 5.7 percent expansion in 2007, but predicted a downturn the following year.
"This forecast is made on the assumption that there would be no recession in the US. However... there is the 30 to 35 percent chance that a recession will happen in the US," said MIER chief Mohamed Ariff Abdul Kareem.
"Figures indicate that Malaysia's growth in the second half is not going to get any better," Mohamed Ariff said after the economy grew by 5.6 percent in the first half.
The MIER said in a report that Malaysia was vulnerable to the effects of the subprime crisis on the US economy, as well as a surge in oil prices that "could undermine global growth".
"If the US economy flaters, East Asia will be adversely affected as well. As a trading nation, Malaysia will feel the heat through the trade and investment channels," it said.
Despite high oil prices, Mohamed Ariff said Malaysian inflation is expected to be stable for the rest of the year, although consumer prices may rise in 2008.
"I don't see any sharp pressures in the next couple of months, but the pressure will pick up in 2008," he said, as the government grapples with high oil prices and the knock-on effects on transport, electricity and gas charges.
Other economists upbeat
Economists were upbeat despite the downgrade, saying that the domestic economy's fortunes remained bright and would be buoyed by a number of large government infrastructure projects.
"We believe the 5.8 percent target set earlier this year is reachable and we are not going to change our own forecast," said Ratings Agency of Malaysia (RAM) economist Yeah Kim Leng.
"Despite the shaky outlook for the US and the global economy, we are confident that we have enough projects to sustain ourselves and cushion the slowdown blow," he said.
Wan Suhaimi Sadie from Kenanga Investment Bank said the key issue was how the government would handle a slowdown, and that so far it had done a "creditable job".
"Monetary policy is also very important and what the government has done in this sector is very good so far, as it has been very accommodative to support the economy and that has soften the blow of any negative impact," he said.
The independent Malaysian Institute of Economic Research (MIER) maintained its forecast of 5.7 percent expansion in 2007, but predicted a downturn the following year.
"This forecast is made on the assumption that there would be no recession in the US. However... there is the 30 to 35 percent chance that a recession will happen in the US," said MIER chief Mohamed Ariff Abdul Kareem. "Figures indicate that Malaysia's growth in the second half is not going to get any better," Mohamed Ariff said after the economy grew by 5.6 percent in the first half.
The MIER said in a report that Malaysia was vulnerable to the effects of the subprime crisis on the US economy, as well as a surge in oil prices that "could undermine global growth".
"If the US economy flaters, East Asia will be adversely affected as well. As a trading nation, Malaysia will feel the heat through the trade and investment channels," it said.
Despite high oil prices, Mohamed Ariff said Malaysian inflation is expected to be stable for the rest of the year, although consumer prices may rise in 2008.
"I don't see any sharp pressures in the next couple of months, but the pressure will pick up in 2008," he said, as the government grapples with high oil prices and the knock-on effects on transport, electricity and gas charges.
Other economists upbeat
Economists were upbeat despite the downgrade, saying that the domestic economy's fortunes remained bright and would be buoyed by a number of large government infrastructure projects.
"We believe the 5.8 percent target set earlier this year is reachable and we are not going to change our own forecast," said Ratings Agency of Malaysia (RAM) economist Yeah Kim Leng.
"Despite the shaky outlook for the US and the global economy, we are confident that we have enough projects to sustain ourselves and cushion the slowdown blow," he said.
Wan Suhaimi Sadie from Kenanga Investment Bank said the key issue was how the government would handle a slowdown, and that so far it had done a "creditable job".
"Monetary policy is also very important and what the government has done in this sector is very good so far, as it has been very accommodative to support the economy and that has soften the blow of any negative impact," he said.
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