THE private sector is expected to drive growth this year as the external sector is projected to grow modestly. Risk to the economy, however, remains should the private sector, because of prolonged uncertainty, adopt a wait-and-see attitude, which would cause delays in investment and a bounce in the electronics industry.
For Malaysia, should the recovery in private investment seen in the second half of 2002 not gain momentum, real GDP growth could be weaker than expected, Bank Negara said in its annual report 2002.
The Government, it said, could counter such risks with additional fiscal and monetary policies.
Forecasts are for private consumption to rise 6.9% this year with steady consumer sentiment, employment and income prospects. Consumption in rural areas is expected to rise as commodity prices remain high, and the high savings rate of 34% gives further potential for increases in consumption.
Private investment is expected to increase by 8.1% in 2003, supported by a steady inflow of foreign direct investment.
The financing gap is estimated to have narrowed with cash flow positions for corporations improving, and narrowing excess capacity in many sectors would be an impetus to private investment.
Public sector investment is expected to rise by 4.1% in 2003 and the focus would be on social and economic services, with emphasis on education and upgrading manpower skills, research and development, as well as agriculture and rural development programmes.
Public sector consumption is anticipated to rise by 3.1%, largely due to emoluments as well as higher outlays on supplies and services.
The value-added of the manufacturing sector is forecast to grow at 5% this year on assumption of a modest growth in the global electronics sector and rising intra-regional trade.
Bank Negara said a PC replacement cycle and low levels of inventory of electronics products which has dipped below US$42bil, compared with US$59bil in February 2001 could see Malaysia benefit from improved demand from the US and the Asian region.
The services sector is forecast to grow at 4.4%, with an expansion across all sub-segments. Improvements in trade, higher tourist arrivals and growth in telecommunications segments will boost growth in the sector.
Growth is also expected to come from new niche areas as well as enhancement of traditional services such as financial and transport services.
The agriculture segment is expected to grow at 1.5% this year due primarily to higher production of crude palm oil, rubber and other agriculture products.
Growth of the mining sector this year is seen at 4.5% again as production of crude oil and natural gas is expected to rise. Crude oil output for 2003 is seen at 620,000 barrels a day.
Construction is forecast to grow at 1.9% mainly due to slower growth in civil engineering and in the residential sub-sector. The take-up rate of new residential houses in first-half 2002 was low.
Bank Negara expects moderation in demand for passenger cars following two years of strong growth. Growth in the construction-related industries is also expected to be modest.
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