Economy recovering after plunging into recession: bank
updated version
Malaysia's economy is in the early stages of recovery after plunging into recession in the final half of 2001, the central bank said today.The bank's comments followed an announcement by the Statistics Department that fourth quarter gross domestic product fell 0.5 percent year-on-year after a revised third quarter fall of 1.2 percent, although growth for the year was up 0.4 percent.
Malaysia last plunged into recession in 1998 amid the Asian financial crisis, but rebounded the following year and recorded a heady 8.5 percent growth in 2000.
The 0.4 percent growth was slightly less than the 0.5-1.0 percent predicted in December by Prime Minister Dr Mahathir Mohamad, who is also finance minister.
In an attempt to boost the ailing economy, Malaysia introduced two fiscal measures in a RM3 billion package in March and a RM4.3 billion package in September.
The central bank, Bank Negara, said in a commentary on the fourth quarter figures that "indications going forward are that the economy is in the early stages of recovery".
Peg well supported
It was expected to strengthen "in tandem with sustained domestic demand and the improved global economic conditions."
The bank said: "The prompt policy response across the globe in the aftermath of Sept 11 and the resolution to the West Asian conflict have aided in the recovery of consumer and business confidence."
In Malaysia itself, the cumulative effects of the series of fiscal measures announced both before and after Sept 11 had a positive impact.
Inflation was low at 1.2 percent and unemployment was contained at below 4 percent over the year.
Meanwhile, the bank said the peg of the ringgit currency at RM3.8 to the US dollar "continues to be well supported by strong economic fundamentals.
"The exchange rate is supported by the strong current account position, higher level of international reserves, low inflation, low external indebtedness, as well as the strong and well-capitalised banking system."
Oil palm growth
Statistics released today showed output from the manufacturing sector fell 8.5 percent in the fourth quarter and 5.1 percent on the year.
The services sector posted 4.9-percent growth in 2001.
Fourth quarter output from the agriculture sector fell 1.4 percent year-on-year but grew 2.5 percent over the year, with the main contributor being oil palm which recorded "robust growth" of 8.9 percent.
The mining sector declined 0.4 percent in the fourth quarter compared to positive growth achieved in the second and third quarters due to marginal declines in crude petroleum and natural gas productions.
On the year, mining output grew 0.2 percent, the department said.
In 2001, government spending was up 11.9 percent compared to 1.7 percent growth in 2000 while private consumption spending rose 2.8 percent against a 12.2-percent rise a year ago.
In 2001, exports fell 7.6 percent while imports were down 8.6 percent
"The significant decline in the exports of electrical and electronic products was the main contributing factor for the lower exports," it said. (AFP)
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