Wednesday, February 24, 2010

GDP heads into positive territory

Datuk Seri Najib Razak announced today that the economy grew by 4.5 per cent for the fourth quarter of 2009, although GDP for the year still shrank slightly.

The prime minister said the positive growth in Q4 was helped largely by the government’s push to pump some RM1 billion a month into the economy.

This had resulted in the country’s economic performance faring better than expected.

Najib said that overall the country’s GDP for 2009 had still contracted by 1.7 per cent which was lower than the projected -3 per cent.

He set a target for his administration of growing the economy this year by five per cent which he said could be achieved barring unforeseen circumstances.

“Sustained growth in private consumption expenditure and increased public sector spending contributed to higher domestic demand, which recorded a growth of 3 per cent in the fourth quarter,” he said in explaining the economy’s better performance in the last three months of 2009.

Najib said that private consumption growth was supported by better conditions in the labour market, a low level of inflation and higher spending for the year-end school holiday period and festive season.

He added that an increase in public sector consumption also helped push growth into positive territory.

Public sector consumption expenditure expanded further by 1.3 per cent while public sector capital spending increased substantially as the implementation of projects under the quarter kicked in.

During the fourth quarter, the development expenditure of the federal government amounted to RM17.6 billion.

Najib said that this was an increase of 9.5 per cent compared with the fourth quarter of 2008.

The PM stressed that the implementation of the two stimulus packages were key to the economic recovery.

“Over 113,000 projects under the two stimulus packages have and are being implemented, involving a total value of RM17 billion. Out of that, the government has made a payment of RM13.9 billion. Therefore on average, the government has pumped approximately RM1 billion per month into the market from January 2009.

“As one of the specific measures in the mini budget 2009, the government has provided training and created employment opportunities to cushion the difficulties faced by retrenched workers and unemployed graduates,” he said.

The government has currently filled 38,495 of the 50,000 vacant posts in the federal civil service and recruited 11,131 officers on contract basis in government agencies since March 2009.

The government has also provided 100,000 training opportunities and job placements through its collaboration with the private sector.

Najib said he expected the private sector capital spending to increase this year.

“There are emerging signs of stabilization in the private sector capital spending as business sentiments continue to improve. This together with the higher public sector capital spending contributed to the turnaround in total gross fixed capital formation which registered a positive growth of 8.2 per cent during the quarter.

“On the supply side, all economic sectors recorded improved performance during the quarter. Growth in the services sector was broad based, with almost all sub-sectors recording higher growth rates. The manufacturing sector recovered to register a positive growth of 5.3 per cent, reflecting the improvement in both external and domestic demand.

“Activities in the construction sector expanded strongly by 9.2 per cent, benefiting primarily the accelerated implementation of projects under the fiscal stimulus packages and the ninth Malaysia plan,” he said.

The country’s export also recorded a positive growth of 5.1 per cent compared to -22.4 per cent in the third quarter.

Foreign direct investment also increased in 2009 to RM7.2 billion compared from RM6.7 billion with investments mainly in the manufacturing and services sector.

Najib said he was confident that the country would maintain its economic growth.

“For Malaysia the economy, yes (we can expect that the worse is over). Provided nothing seriously unexpected happens with respect to the global economy. For example any major sovereign collapse.

“Barring unforeseen circumstances of that nature, we could safely say that we have recovered from the crisis and we should be looking forward to a strong growth for 2010,” he said.

Najib said he expected the economy to grow by five per cent this year.

“As you know earlier forecast was four per cent but for this year, I am hoping that I can achieve one or two per cent more than that so we are going all out to make sure that we are able to generate the confidence and speedy implementation of projects.”

news courtesy of Malaysian Insider

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