Posted on 23 Jan 2009
Local fund managers and economists generally expect a lower gross domestic product (GDP) growth this year than the government forecast of 3.5% but are mixed on whether the growth will hit 1.3% as predicted by the Malaysian Institute of Economic Research (Mier).
RAM Holdings Bhd group chief economist Dr Yeah Kim Leng said it was still in the midst of re-examining the forecast figures.
“We had forecast GDP growth to be 3.6% for 2008 and are in the midst of examining the deeper-than-expected global output decline on the Malaysian economy,” he told StarBiz.
Areca Capital Sdn Bhd chief executive officer Danny Wong said it was hard to quantify the GDP growth for the full year.
“We anticipate a slowdown in economic activity but a recession is unlikely, unless plans to stimulate the economy are not implemented,” he said.
An economist with a local bank said GDP growth this year was likely to go below 3.5% as the global economic downturn impact would be more severe than expected.
“It’s difficult to predict how far GDP growth will fall against the government’s forecast early in the year.
“But all major indicators, including export figures, show a marked decline in global demand, especially from developed countries like the
He also said many economists and analysts were keeping an eye on the fourth-quarter results of listed companies as their performance would provide some early signs of the economy’s health.
He said Mier’s GDP growth forecast appeared to be very conservative. “If the growth is 1.3% it would be a very tough year for all Malaysians,” he said.
Most economists said the government’s forecast would need to be revised downwards and also believed Mier’s severe prediction could be a possibility.
AmResearch Sdn Bhd regional head (equity research) Benny Chew said the first half of the year would be critical and that GDP growth could be severely curtailed.
“There is a possibility the economy might fall into a technical recession in the first half,” he said.
A technical recession refers to two consecutive quarters of negative or contracted economic growth.
Mier’s prediction stemmed from a recent survey it conducted. The survey revealed that consumer and business confidence indices had dropped sharply below the 100-point mark in the fourth quarter of 2008.
It also reported that the business condition index had plunged to 53.8 points in the fourth quarter, compared with 99.6 points in the preceding quarter.
The consumer sentiments index also fell to 71.4 points in the fourth quarter, against 88.9 points in the third quarter, showing that household spending had soften.
