MALAYSIA'S fourth quarter gross domestic product (GDP) is expected to have risen 5%-6% year-on-year after a gain of 5.6% in the third quarter, bringing full-year 2002 growth to 4%, economists said.
They said recent monthly industrial output data suggested fourth-quarter growth similar to the third, supported by continued solid domestic demand, which in turn had been helped by government stimulus measures.
December industrial output was up 8% year-on-year and up 2.5% from November, when it rose 6.4% year-on-year but fell 3.6% compared with October.
MMS International regional economist David Cohen said he was estimating 5.2% growth in the fourth quarter and 4% for the full year.
“Quarter-on-quarter GDP rose 0.8%, not seasonally adjusted ... (which) more or less continues the recent trend,” Cohen said.
RAM Consultancy Services chief operating officer Yeah Kim Leng, who expects the economy to have grown 5%-6% in the final quarter of 2002, said: “The strong IPI (industrial production index) at year-end suggests that the fourth quarter is almost the same as the third.”
This would have been quite a good performance given the problems posed in the fourth quarter by the growing crisis over Iraq and the consequent dampening of demand, but this would have been helped by the government’s stimulus measures.
In view of such adverse external conditions, Yeah believes that 4% growth for 2002 is a “credible performance.”
“The fourth-quarter growth moderated because production and exports moderated due to the uncertainties,” said SBB Securities economist Manokaran Mottain, who is expecting fourth-quarter GDP growth of 5%.
Going forward, economists expect the economy to grow 4%-5.7% in 2003, supported by domestic demand and the government’s plans to further pump-prime the economy.
“People are nervous about the potential shock from the Middle East. Barring that, we should remain on a moderate upward trajectory. To get 5% growth in 2003 would just require a moderate quarter-on-quarter growth pace,” said MMS’ Cohen.
Some local economists are expecting the government to announce a wide-ranging stimulus package next month to sustain economic growth and to mitigate short-term external shocks.
“It will be broad ranging to sustain the economy and to identify new sources of growth,” said RAM’s Yeah, with direct fiscal spending complemented by some structural changes to attract more foreign direct investment. – AFX
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