PUTRAJAYA:The Government has revised downwards the country's GDP forecast for 2009 to between minus 4% and minus 5% for 2009 from earlier projection of minus 1% to 1% after 1Q GDP shrank a worst-than-expected 6.2%.
Prime Minister Datuk Seri Najib Razak said on May 28 the weaker forecast was after a weaker-than-expected export performance.
“The sector pulling down the economy is exports, which plummeted more than expected,” he said.
Najib said the decline in exports had affected corporate earnings here, especially those in the manufacturing sector, which in turn affected private consumption, while the weak external environment had led to a fall in private investment, as foreign direct investments also fell.
He said the revised GDP projections were based on a realistic view of current conditions, adding that the worst-case scenario would depend on the performance of the US and Europe economies.
“Our recovery depends on world economic recovery, and is contingent on what happens in the US and Europe,” he said.
He added that the government’s downward revision to GDP was also premised on the more-than-expected slump in the global economy, as the International Monetary Fund also last month revised its global growth projections for 2009 to a contraction of 1.3%, from a growth of 0.5% previously and its global trade projections to an 11% decline from a 2.1% growth.
However,Najib added Malaysia’s economy could recover by year-end, driven by its RM67 billion stimulus spending.
“The second half of the year should be better, and we are hoping 4Q09 to show positive growth,” he said.
He said, however, given the negative growth expected in the second and third quarters, following a 6.2% contraction in 1Q09, the economy would register a negative growth for the year despite a turnaround in 4Q.
On May 27, Bank Negara said the Malaysian economy contracted 6.2% on-year in the first quarter of 2009, the worst since the Asian financial crisis, as manufacturing output shrank sharply as exports and industrial production fell.
Manufacturing contracted 17.6%, mining fell 5.2% while agriculture saw a 4.3% decline. Services also showed a decline of 0.1% but CONSTRUCTION [] rose just 0.6%.