Bangkok (UN Information Services) – Malaysia’s economic growth is expected to slow to 5.8 per cent in 2008 after making gains in 2007 to 6.3 per cent due to higher private consumption and fixed gross investment, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
In its Economic and Social Survey of Asia and the Pacific, ESCAP said a slowing in the electronic export markets was a key reason for the anticipated slowdown. “The main drag on Malaysia’s exports has been the weaker demand for semi-conductors and other electric products in the United States market,” ESCAP said.
The economic growth of 2007 was based on strong domestic demand which more than compensated for a downturn in export growth to 2.1 per cent in 2007 from 7.4 per cent a year earlier.
Private consumption grew by 10.7 per cent in 2007 from 7.1 per cent in 2006, while investment spending rose by 9.5 per cent in 2007 from 7.9 per cent a year earlier. “Overall, the growth rate of domestic demand increased to 9.7 per cent from 7.0 per cent in 2006,” ESCAP said in its Survey.
ESCAP noted that inflation was expected to rise to 2.8 per cent in 2008 after dipping in 2007 to two per cent.
The lower inflation of 2007 was a result of a five per cent appreciation of the ringgit against the US dollar that put downward pressure on import prices. Local interest rates have remained stable.
Malaysia remained a target for direct investment. This increased to US$8.6 billion in 2007, up from US$6.1 billion in 2006, while outward direct investment climbed to US$9.7 billion from US$6.0 billion a year ago. The outflow of funds also eased pressure on the ringgit’s appreciating in value.
In a broadening of the country’s trade ties, Malaysia signed a bilateral free trade agreement with Pakistan in November 2007. The agreement includes provisions for bilateral technical cooperation, and capacity building in sanitary and phytosanitary (food safety) measures intellectual property protection, construction, tourism, healthcare and telecommunications.
Further information on the Survey can be found at:
For more information, please contact:
Hak-Fan Lau, UN Information Services, ESCAP
Tel.: +66-2-288-1866, Mob.: +66-84700-1147
Ari Gaitanis, UN Information Services, ESCAP
Tel.: +66-2-288-1862, Fax: +66-2-288-1052