Business

Published: Thursday May 28, 2009 MYT 3:35:00 PM
Updated: Thursday May 28, 2009 MYT 3:48:36 PM

2009 GDP forecast revised; contraction of 4%-5%


PUTRAJAYA: Malaysia's gross domestic product (GDP) has been revised to a contraction of between 4% and 5% this year on the back of worsening global economic outlook, says Prime Minister Datuk Seri Najib Tun Razak.

"The revision is due to very weak external demand as well as falling private sector investment and FDI (foreign direct investment) flows," he said at a press conference today.

The conditions of the external environment was "far worse than expected," he added. The Government had earlier estimated GDP to grow at 1% or to contract up to 1%.

Najib said nonetheless, the fourth quarter GDP was likely to return to growth while next year should be in the positive territory.

Any recovery would depend on the improvements of the US and European economies, he added.

Yesterday, Bank Negara released the first quarter GDP figure that showed a contraction of 6.2%, and indicated that the second quarter could be "similar."

Two consecutive quarters of negative GDP growth would translate into a technical recession.

Earlier this year, the Government announced the second stimulus package worth RM60bil, bringing the total fiscal spending to RM67bil.

The central bank, after cutting overnight policy rate three times since last November, has maintained the benchmark rate at 2% in the past two monetary policy meetings.

It believed that the accumulated monetary policy initiatives and measures to enhance access to financing were sufficient to provide support to domestic demand.

At 3.50pm, the Kuala Lumpur Composite Index was down 8.76 points at 1,038.9.

  • E-mail this story
  • Print this story