Thursday, February 25, 2010

Anwar on economy: Worst yet to come

Opposition leader Anwar Ibrahim has questioned the government over claims that that Malaysia is on the road to economic recovery after registering a 4.5 percent gross domestic product growth (GDP) in the last quarter of 2009.

According to Anwar, a former finance minister, such pronouncements were "not only premature but irresponsible" pointing out that the increased growth was due to heavy government expenditure rather than a rise in private spending.

NONE"It is clear that the supposedly stronger growth was due to the massive pump priming by the government over the last year. Propping up the sagging economy is at best a stop-gap measure.

"Pump priming by definition cannot be permanent. I am deeply concerned that the continuous reliance on massive spending will take us down the road to economic serfdom. And that may not be too distant in the future," said Anwar in a statement today.

The opposition leader was referring to the government's RM60 billion stimulus package last year.

Anwar said the pump-priming measures, such as in the many leakages-plagued mega-projects, were the Barisan Nasional government's sole economic policy since 1998, the year he was sacked as deputy prime minister and finance minister.

He said this move was done to address the dramatic decrease in private investments, which grew at the compound annual growth rate of 16.2 percent between 1991 and 1997, but fell to 1 percent between 1998 and 2008.

5% growth unlikely

"The data on private investment trend since 1991 should serve as a reminder of the path to economic damnation that BN has dragged us into," said Anwar.

"Translating this into private investments in real terms, between 2005 and 2008, private investments into our economy stagnated at RM20.3 billion each year. This is even lower than the private investments figure in 1991, nearly 20 years ago".

On Wednesday, Prime Minister Najib Abdul Razak declared that the "worst was over" for the economy and that "we can safely say we have recovered from the crisis".

Though GDP growth dipped to -1.9 percent for 2009, Najib said the government expects 5 percent growth for 2010.

Despite Najib's optimism, Anwar described the 2010 growth predictions were "disingenuous at best".

"What the prime minister does not say to the people is that even if our economy grows by 5 percent, Malaysia will continue to fall behind Korea, Singapore, Taiwan, Indonesia, Thailand, Philippines and even Vietnam in 2010".

IMF says otherwise

Anwar's predictions were based on the International Monetary Fund Oct 2009 forecast which said Malaysia is expected to perform worst among these countries, though the rest of the world will show signs of recovery.

Vietnam, for example, is expected to double Malaysia's growth rate while the other countries will outpace Malaysia by an average of 50 percent.

"That is why Pakatan Rakyat will not jump too quickly to declare that the economy has recovered because there are still structural problems with the economy that have to be addressed urgently if we do not want to continue to fall behind.

"The Barisan Nasional government must own up to the fact that our economy is the way it is because of the years of mismanagement and corruption perpetrated by the powers-that-be," he said.

Anwar said Malaysia's economic future can only be guaranteed by a government that is accountable, transparent and practices good governances.

"That is why Pakatan Rakyat will remain relentless in the pursuit to offer the people an efficiently managed economy that will sustain the livelihood of future generations," he added.

news courtesy of Malaysiakini

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