KUALA LUMPUR: The Government’s 2003 gross domestic product (GDP) growth forecast for the country will remain at 4.5% because of the positive domestic and global economic outlook for the rest of the year.
Responding to the Malaysian Institute of Economic Research’s (Mier) upgrade of its forecast from 3.7% to 4.3% on Wednesday, Second Finance Minister Datuk Dr Jamaluddin Jarjis said the Government would not revise its forecast.
“Our forecast of 4.5% or more remains. Let Mier continue to look at their model, we are firm with ours,” he said yesterday after opening an inaugural workshop on merchant banking activities for journalists jointly organised by Affin Merchant Bank Bhd and the Malaysian Press Institute.
He said the Government was confident of a minimum 4.5% GDP growth because the Severe Acute Respiratory Syndrome (SARS) outbreak was declared over sooner than expected and its impact on the hospitality sector has been minimal.
“Tourist arrivals in May were already on the increase, and we expect even more tourists in June onwards,” Dr Jamaluddin said.
He said industrial production had also increased and export figures from January to May showed a trade surplus of RM29.7bil compared to only RM18.5bil in the same period last year.
“Our reserves are also very strong,” he added.
Dr Jamaluddin said other factors which boded well for GDP growth was the role of the Kuala Lumpur Composite Index in creating confidence and the increasing number of companies queuing up to sort out their initial public offerings.
He said the Government’s RM7.3bil economic stimulus package announced in May would also have an impact on economic growth in the third and fourth quarters.
On the global front, Dr Jamaluddin said the economic outlook in the United States, Germany and Japan was also more upbeat and this would have an impact on Malaysia’s economy.
To a question on whether the Government would consider reviewing the ringgit’s peg of RM3.8 to the US dollar, he said: “We are happy with our pegging. It works very well.”
Mier executive director Dr Mohamed Ariff said on Wednesday that the ringgit was undervalued by some 10% against the US dollar and other major currencies, and it posed the risk of “serious exchange rate misalignment.”
He said Malaysia’s monetary policy options could be limited with the two currencies moving in opposite directions.