Economy may contract more than 1pc

By Adeline Paul Raj
Published: 2009/05/27

Second Finance Minister expects the economy to recover from the third quarter of this year and register positive growth next year

Malaysia's economy may contract by more than 1 per cent this year but is expected to return to positive growth next year, Second Finance Minister Datuk Ahmad Husni Mohamad Hanadzlah says."It will be a bit lower than minus 1 per cent this year.

(This) is below the forecast that we made last year," he told reporters after officiating at the launch of the Securities Commission Executive Enhancement and Development Programme in Kuala Lumpur yesterday.

The government's earlier forecast for gross domestic product (GDP) growth in 2009 was between a 1 per cent contraction and 1 per cent growth.Husni said Prime Minister Datuk Seri Najib Razak will announce the revised forecast, while Bank Negara Malaysia is scheduled to announce the first-quarter GDP numbers later today.

Economists recently polled by Business Times said the economy is likely to have shrunk that quarter, for the first time since 2001, by 3.47 per cent as exports shriveled up.For the full year, they expect the economy to contract by 1.52 per cent.

Husni expects the economy to recover from the third quarter of this year, as that is when the impact of the government's recent RM67 billion stimulus measures would be felt.Next year, the country should be able to register positive economic growth, he added.

The government is developing a new economic model for the country, Husni said, adding that the key thrust of the model would be quality investments.He said the government is reviewing its economic growth forecast for 2009 as the International Monetary Fund (IMF) has recently lowered its projection for global growth.

The IMF said in April that the economy would likely contract by 1.3 per cent this year, whereas in January, it had expected 0.5 per cent growth.