Posted on 03 Mar 2010
The country’s targeted gross domestic product (GDP) growth of 6% this year may be challenging but not inconceivable if certain conditions can be met, economists said.
The target can be achieved if there is strong private sector response in the form of higher investments from both domestic and foreign sources, according to RAM Holdings Bhd chief economist Dr Yeah Kim Leng.
Yeah said it was also important for Government policies to create a more conducive and attractive environment for business expansion and investment in new growth areas that had been targeted as key sectors in the various growth corridors.
“Moreover, given that global demand and international trade and investment flow has stabilised, a higher level of domestic demand in the form of higher consumption and investment will provide an added boost for growth,” he told StarBiz.
On whether
“It also depends on how effective any new Government policies are as well as their implementation to create an investment climate which will put
Affin Investment Bank economist Alan Tan said to achieve the projected 5% to 6% GDP growth rate, the country would need to have a combination of three factors, namely continued demand for its manufactured goods, growth in private consumption and ongoing Goverment spending in the country’s fiscal programme.
“We are an open economy which is highly dependent on trade as a key growth driver. We must continue to see healthy demand for our manufactured goods especially in the semiconductor industry,” he said. “A lower interest rate environment and easy access to financing will also help to support private consumption, another economic growth driver.”
Tan expects central banks globally to continue to adopt an accomodative monetary policy and Governments to continue to have expansionary fiscal stimulus into 2011 to prevent an unexpected slowdown in the global economy.
RHB Research Institute economist Peck Boon Soon said it would be a challenge to achieve the targeted growth rate of 6%.
He said external demand for Malaysian goods was recovering but noted that the pace was still slow as the gradual improvement in the
“Although private investments have returned this year, the pick-up is not strong,” he said.
The country’s GDP growth for the fourth quarter of 2009 stood at 4.5%.
For the whole of last year, however, the economy contracted 1.7%, lower than the projected 3% contraction.
