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Wednesday November 18, 2009

Malaysia GDP could hit 6% by 2012, says World Bank economist

By FINTAN NG


KUALA LUMPUR: Malaysia’s gross domestic product (GDP) may rise to 6% by 2012, driven by Government reforms and as the global economy continues to recover, a World Bank economist said.

The Government expects the GDP to expand 3% in 2010, against a forecast of 4.1% by the World Bank. It also sees the economy shrinking 3% this year, less than an earlier forecast of a contraction of 4% to 5%.

World Bank senior economist Philip Schellekens said the 6% growth was achievable as reforms have encouraged more private sector participation and greater productivity.

“We anticipate that the reform momentum in Malaysia is building up and this will contribute to greater productivity growth and a new dynamism in the economy,” Schellekens told a press conference following a talk entitled “Malaysia:Productivity and Investment Update,” organised by the Economic Planning Unit and the World Bank.

'The reform momentum in Malaysia is building up' WORLD BANK SENIOR ECONOMIST PHILIP SCHELLEKENS

Malaysia has so far liberalised 27 subsectors in the services sector, freeing up constraints in the banking and financial industry.

It also initiated reforms on bumiputra equity investment and putting more effort and money in human capital development.

Schellekens also said “Malaysia is well positioned to participate in the global economic recovery on the back of rising demand in China and the rest of the region as well as progressive improvement in advanced economies,” observing that Malaysia’s economy has remained resilient although the manufacturing sector had gone through one of its worst export slumps.

The World Bank economist said the reforms would also boost private sector participation in the economy, noting that private sector investments have not recovered to the levels before the Asian Financial Crisis of the late nineties.

“After the crisis, private sector investment in Malaysia fell to between 10% and 12% and has never recovered to the pre-crisis levels of 30% (as a percentage of total investment to real GDP,” he said.

Schellekens said the Government’s target of 5.5% GDP growth until 2020 was “realistic,” provided the Government could effectively pull off the various programmes to revitalise the economy that had been announced over the year.

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