Malaysia: Better GDP Growth in 4th Quarter 2009

 

The Malaysian economy grew by 4.5 pct for the fourth quarter of 2009, although GDP for the year still shrank slightly by 1.7 pct. This was lower than the projected -3 pct.

The positive growth in Q4 was helped largely by the government’s push to pump some RM1 billion a month into the economy. This had resulted in the country’s economic performance faring better than expected.

The government has set a target for growing the economy this year by five per cent which should be achievable barring unforeseen circumstances.

Increased public sector consumption also helped push growth into positive territory.

Public sector consumption expenditure expanded further by 1.3 per cent while public sector capital spending increased substantially as the implementation of projects under the quarter kicked in.

During the fourth quarter, the development expenditure of the federal government amounted to RM17.6 billion.

This was an increase of 9.5 per cent compared with the fourth quarter of 2008.
PM Najib believes that the implementation of the two government stimulus packages were key to the economic recovery.

“Over 113,000 projects under the two stimulus packages have and are being implemented, involving a total value of RM17 billion. Out of that, the government has made a payment of RM13.9 billion. Therefore on average, the government has pumped approximately RM1 billion per month into the market from January 2009.
Najib said he expected the private sector capital spending to increase this year.

“There are emerging signs of stabilization in the private sector capital spending as business sentiments continue to improve. This together with the higher public sector capital spending contributed to the turnaround in total gross fixed capital formation which registered a positive growth of 8.2 per cent during the quarter.

“On the supply side, all economic sectors recorded improved performance during the quarter. Growth in the services sector was broad based, with almost all sub-sectors recording higher growth rates. The manufacturing sector recovered to register a positive growth of 5.3 per cent, reflecting the improvement in both external and domestic demand.

“Activities in the construction sector expanded strongly by 9.2 per cent, benefiting primarily the accelerated implementation of projects under the fiscal stimulus packages and the ninth Malaysia plan,” he said.
The country’s export also recorded a positive growth of 5.1 per cent compared to -22.4 per cent in the third quarter.

Foreign direct investment also increased in 2009 to RM7.2 billion compared from RM6.7 billion with investments mainly in the manufacturing and services sector.
Najib said he was confident that the country would maintain its economic growth.
“For Malaysia the economy, yes (we can expect that the worse is over). Provided nothing seriously unexpected happens with respect to the global economy. For example any major sovereign collapse.

“Barring unforeseen circumstances of that nature, we could safely say that we have recovered from the crisis and we should be looking forward to a strong growth for 2010,” he said.

Najib said he expected the economy to grow by five per cent this year.

“As you know earlier forecast was four per cent but for this year, I am hoping that I can achieve one or two per cent more than that so we are going all out to make sure that we are able to generate the confidence and speedy implementation of projects.”