Malaysia Economy Prospects

Published on Business Times: Malaysia exports may fall 4pc as electronic demand dips

• MALAYSIA's exports may fall as much as 4 per cent this year as demand for the Southeast Asian nation's electronics slumps amid the global recession, the government said.
  
  Overseas sales of made-in-Malaysia products - mostly electrical components, palm oil and crude oil - may increase 0.5 per cent at best in 2009, Minister of International Trade and Industry Tan Sri Muhyiddin Yassin said. Exports rose 9.6 per cent in 2008.
  
  "The economic situation on the global front is very bad," Muhyiddin said yesterday in Kuala Lumpur. Malaysia's trade performance is "very difficult" to predict this year, he said.
  
  Demand for electrical and electronics goods, which account for about 38 per cent of Malaysia's exports, is drying up as consumers worldwide spend less. The government is due to propose a second stimulus plan to Parliament on March 10 in a bid to avoid entering a recession.
  
  The government has said the second plan will be larger than a package unveiled in November worth RM7 billion, joining countries from China to Thailand in expanding budgets to counter the global economic slowdown.
  
  Muhyiddin said he has asked the Finance Ministry to include in the package grants for small businesses, cuts in sales and corporate taxes, and a reduction in contributions by employers to the country's biggest pension fund.
  
  The government may announce a stimulus of between RM10 billion and RM15 billion that gives tax breaks to small-and medium-sized businesses, RHB Research Institute Sdn Bhd said yesterday. - Bloomberg

Last week Challenging year ahead for Malaysia

• Trade figures showing sharp downtrend
  
  THE country’s latest trade figures announced last week have brought closer to home the reality that the current economic downturn could be more severe than anticipated.
  
  December exports fell 14.9% year-on-year, the biggest slide since September 2001, while imports fell 23.1%, the biggest since August 2001.
  
  This has raised concerns that the decline in global demand in the coming months may be more severe and will weigh on the country’s gross domestic product (GDP) growth.

Let's note some 'expectations', views and opinions made in that article.

• Kenanga Research, in a recent note, has revised its GDP forecast to 0.6% for 2009 from 3.3% while the average GDP growth for 2008 may edge closer to 5%.
• AmResearch estimates GDP growth of 4.9% in 2008 and a contraction of around 0.5% in 2009.
• RAM Holdings Bhd group chief economist Dr Yeah Kim Leng sees a very challenging first half as industries and companies seek to weather the export slump and knock-on effects of cutback in consumer spending and business investment. “It will also be smaller than that of our last recession in 1998 as most large firms are generally healthy going into this economic slowdown,” he told StarBiz. His initial growth forecast of 3.6% this year will be more than halved due to the deepening global downturn. ( forecast of 3.6% halved? LOL! Why can't Star Biz states just the number? :P )
• Malaysian-American Electronics Industry chairman Datuk Wong Siew “If the downturn is stronger than expected, I foresee more retrenchment in the second half of the year as companies have already cut costs and will have to adjust their human resource capacity to meet demand,”
• Retail Group Malaysia managing director Tan Hai Hsin sees bad times for retailers, at least until the second quarter of the year with the end of the annual festivities and lower consumer spending due to more retrenchments and reduced take-home pay.
• This year’s forecast car sales have been revised downward by the Malaysian Automotive Association (MAA) to 480,000 units, a 12.4% drop versus last year.

Now in today's papers , Malaysia economic growth target realistic: PM

• THE Malaysian economy can still grow this year and the government's expectation is realistic, says Prime Minister Datuk Seri Abdullah Ahmad Badawi.
  
  He did not say what would be the revised economic expansion target that would be announced on March 10.
  
  "We are still realistic (about positive economic growth) depending on how we apply ourselves to this task," Abdullah told industry captains at a dialogue session organised by the KL Business Club in Kuala Lumpur yesterday.
  
  The government had targeted to grow the economy by 3.5 per cent this year. However, Deputy Prime Minister Datuk Seri Najib Razak is set to announce a revised figure on March 10, the same day he will announce the second stimulus package.
  
  Abdullah was also asked about the trend of protectionism where countries impose measures to protect local businesses, often at the expense of other nations.
  
  "This is a symptom of failure of World Trade Organisation (WTO) talks. That is why countries want to go on their own," he said.
  
  As countries cannot rely on the WTO, smaller groups of nations like Asean, for example, will be more important. Groupings like Asean will then engage with similar groupings like the European Union to boost trade.

How?