Posted on 10 Sep 2007
Malaysia's economy is expected to grow between 6% and 6.5% in 2008, underpinned by the services and construction sectors while it expects the manufacturing sector to regain its momentum.
According to the Economic Report 2007/2008 released on Sept 7, it expects the services sector to grow at a slower pace of 8.6% from the forecast of 9% in 2007.
Manufacturing is expected to pick up pace to expand 3.8% (2007: 3.1%) on the back on an anticipated recovery in the global electrical and electronics
Construction will continue to expand at a faster pace in 2008, supported by the implementation of the Ninth Malaysia Plan (9MP) projects. It is forecast to grow at 6.3% from 5.2% in 2007.
Mining and quarrying is forecast to also pick up speed to expand 4% in 2008 (2007: 3.3%) while agriculture is expected to expand 3.5% (2007: 3.1%).
Economic management in 2008 will focus on maintaining macroeconomic stability and enhancing competitiveness to ensure sustainable growth. It will also focus on human capital management and this will see the government improving the education system, enhancing the skill and industrial training institutes.
The government expects to reduce the fiscal deficit to 3.1% of GDP or RM20.9 billion in 2008 (RM19.9 billion deficit or 3.2% of GDP in 2007).
However, the government sees several downside risks which could derail the growth momentum of the world economy. These include lower-than-expected growth of the
On its forecast economic growth for 2008, it said domestic demand would be the main driver of the economy, while external demand was expected to pick up.
"Private investment and consumption spending are expected to remain robust, while public expenditure continues to expand.
"Inflation is anticipated to remain low despite strong expansion in the economy as output growth us still below potential level," it said.
On the services sector, the government expects 8.6% growth (2007: 9%), supported by high domestic spending, higher tourist arrivals. The real estate and business services as well as finance and insurance sub-sectors are expected to expand.
Manufacturing is projected to grow by 3.8% (2007: 3.1%) as it expects global demand for manufactured goods, particularly E&E products is expected to pick up.
The agriculture sector is expected to grow at a faster pace of 3.5% (2007: 3.1%) on the back of higher output in food commodities and higher production of oil,palm and rubber.
The Economic Report anticipated plam oil output to increase by 2% following improved yields and expansion in matured areas.
Mining sector is expected to expand 4% (2007: 3.3%), boosted by higher production of crude oil and natural gas.
The construction sector is expected to grow at a faster pace of 6.3% (2007: 5.2%), supported by ongoing infrastructure projects and new projects under the 9MP.
On domestic demand, the report said that it would be driven by the private sector. Private investment is forecast to increase by 9.5%, accounting for 11.9% of GDP (2007: 7.1%; 11.6%).
Private consumption is expected to increase 7.9% (2007: 9%) due to higher disposable income arising from firm commodity prices and sustained economic activity. The share of private consumption to GDP will increase to 50.8% in 2008 (2007: 49.9%).
The report said public consumption was expected to rise 5.5% in 2008 (2007: 10.8%), following higher expenditure for emolument in tandem with increased productivity in the public services.
Share of public consumption to GDP expected to be sustained at 13.4% in 2008 (2007: 13.5%).
Public investment growth is expected to be 0.5%, accounting for 10.8% of GDP, supported by development allocation of Federal Government expenditure and also higher capital outlay by non-financial public enterprise.
www.theedgedaily.com, September 9, 2007
