Malaysia's export-driven economy is expected to shrink by more than the forecast contraction of 1.0 percent in 2009.

In March, the government warned the economy could contract by 1.0 percent this year despite a massive RM60 billion stimulus package, dumping its earlier target of 3.5 percent growth.

malaysia stock exchange market klse 141008 01 "I cannot tell you but it will definitely be below minus 1.0 percent," Second Finance Minister Ahmad Husni Mohamad Hanadzlah said according to state news agency Bernama .

His comment came after economists predicted that Malaysia's economic contraction would be much more severe than the government forecast.

Official data showed Malaysia's economic growth slowed to just 0.1 percent in the fourth quarter of 2008, hit by falling exports and manufacturing.

Figures for the first quarter of 2009 are to be released on Wednesday.

Announcement by Bank Negara tomorrow

"Wait for the central bank's announcement tomorrow. Prime Minister Najib Razak will make another announcement the next day on the new forecast growth for 2009 and we will then know the position of the country's economy," Ahmad Husni said.

An independent think-tank, the Malaysian Institute of Economic Research (MIER), said last month that the economy would shrink by 2.2 percent in 2009, citing gloomy business and consumer confidence amid the global downturn.

MIER also said Malaysia would slide into a technical recession - defined as two consecutive quarters of negative growth - in the first half of 2009, as it suffers the knock-on effects of a flagging global economy.

Meanwhile, shares closed down 0.14 percent today after the government said the economy is expected to shrink by more than forecast this year.

Market sentiment changed after lunch

The Kuala Lumpur Composite Index lost 1.51 points to 1,051.63, with losers outpacing advancers 399 to 266.

The market was also hit by losses in plantation stocks and profit-taking on heavyweights.

"Sentiment changed markedly after lunch, with weaker CPO (crude palm oil) futures hitting plantations and (Second Finance Minister) Ahmad Husni Mohamad Hanadzlah saying the economy will contract by more than 1 percent for 2009," one dealer told Dow Jones Newswires.

Among decliners, Malaysia Airlines was down 4.30 percent to RM3.14 and KL Kepong lost 2.50 percent to RM11.70.

On the upside, Maybank rose 1.90 percent to RM5.25 and BAT added 1.20 percent to RM43.25.