MIER sees 4% growth in 2010

Written by Reuters
Tuesday, 29 December 2009 23:47

KUALA LUMPUR: Malaysia, Asia's third-most trade-dependent economy, may grow 4% in 2010, helped by government spending, a leading economic think-tank said today.

The economy, hit hard by the global economic downturn, is likely to shrink by 2% to 3% in 2009, said Mohamed Ariff Abdul Kareem, executive director of Malaysian Institute of Economic Research (MIER).

"Looking at the numbers of the third quarter and the subsequent monthly data, we think the growth for this year will be in the region of -2% to -3%," Mohamed Ariff was quoted by Bernama as saying.

The economy contracted by 1.2% in the third quarter from a year ago.

Ariff said he expects growth to remain lacklustre for the next two years due to volatile global conditions and rising budget shortfalls.

"The recovery that we see in Malaysia is very fragile. You are talking about 4% growth only and this is way below Malaysia's potential growth of 5.5%," he said.

"We are out of recession but we are going to be stuck in a slow, sluggish growth for at least two more years," he added.

Malaysia's budget deficit will reach a more than 20-year high of 7.4% of gross domestic product (GDP) this year as it hiked spending during the height of the global financial crisis. — Reuters