Govt maintains GDP growth forecast after strong showing

  • Nation
  • Thursday, 29 May 2003


KUALA LUMPUR: The Government is maintaining its GDP growth forecast this year at 4.5% on the back of an expected stronger performance in the manufacturing and service sectors, particularly in the second half of the year.  

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said that despite the outbreak of Severe Acute Respiratory Syndrome (SARS) in the region, which has damped economic activity in sectors such as retail, travel and tourism, the economy as a whole had not been severely affected. 

She said many sectors of the economy, such as manufacturing, agriculture and services have “remained strong,” while exports and trade have continued to grow at higher levels than earlier projected.  

“The underlying growth potential for the economy was 4.5% – that has not changed,” said Zeti, who added that the economic stimulus package announced last week would mitigate the worst effects of SARS for those sectors most affected by the outbreak.  

While the impact of SARS would be felt in the second quarter, the outlook for the second half of the year was a further strengthening of the Malaysian economy, she told reporters here yesterday after announcing that Malaysia’s GDP grew by 4% during the first quarter of 2003. 

The growth, which Zeti described as ”well within expectations,” compares favourably with the 1.3% rise achieved during the corresponding quarter of last year. 

It is, however, below the 5.4% growth attained by the country during the preceding quarter. 

Zeti explained that a lower growth in the first quarter of the year was seasonally normal as the country traditionally chalks up a higher growth rate during the fourth quarter of any year.  

She said the economy had remained resilient despite external uncertainties arising during the first quarter, such as the Iraq war and the onset of SARS.  

Domestic demand, which includes both private and public consumption, played a major role in growing 5.4% during the period, while exports have expanded faster than projected, she said.  

According to Bank Negara, exports grew by 7.8% during the first quarter, led by robust semiconductor demand which rose 27% and higher sales of palm oil, crude oil and liquefied natural gas.  

The country’s external position, meanwhile, strengthened with the trade surplus growing to RM17.5bil.  

Zeti said there was continued expansion of the economy in all sectors, with the main impetus coming from manufacturing and services.  

The manufacturing sector expanded by 5.2% , supported by stronger growth in the domestic-oriented industries and expansion in export-oriented industries.  

The overall services sector grew by 4%, with rapid expansion in the transport, storage, communications and telecommunications sub-sectors. 

The agriculture and mining sectors grew by 3.6% and 3.8% respectively while the construction sector registered an expansion of 1.2% during the quarter. 

Related Story:Analysts expect 2nd quarter to be tougher 

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