GDP growth slows to 4pc as global economy falters

By Lee Wei Lian
The Malaysian Insider
Aug 17, 2011

KUALA LUMPUR, Aug 17 — Malaysia’s economic growth decelerated to its slowest pace of four per cent since the 2009 recession as the country was hit by a slowdown in external demand and a moderation in government spending, Bank Negara said today.

This was the fifth consecutive decline in quarterly growth and down from the 4.6 per cent growth registered in the first quarter of this year.

Bank Negara governor Tan Sri Zeti Akhtar Aziz added, however, that stronger growth is expected in the second half of the year and that while there is no revision to the 5-6 per cent growth target for the year, it will “very likely be closer to 5 per cent.”

Zeti said that the nation’s economic fundamentals were still strong with a 5.2 per cent growth in domestic consumption, low unemployment and low levels of impaired loans at only two per cent.

Domestic consumption growth was down, however, from 6.9 per cent in the first quarter due to public sector spending growth falling from 8.9 per cent to four per cent.

Private sector consumption growth, meanwhile, remained fairly steady at 6.4 per cent as compared with 6.7 per cent in the first quarter.

Net foreign direct investment (FDI) rose to RM6.2 billion in the second quarter from RM4 billion in the first quarter thanks to an improved investment climate, which led to an increase in domestic private sector investment, said Zeti.

With concerns mounting over a global economic slowdown, the central bank will now have to balance the need to fight inflation while supporting economic activity in setting interest rates.

Zeti said that inflation hit 3.4 per cent in July and 3.3 per cent for the first half of the year.

She said that the central bank’s current overnight policy rate (OPR) of three per cent was still supportive of economic growth.

The Malaysian economy grew 7.2 per cent in 2010 as it rebounded from the global economic slowdown in 2009.

The global economy this year, however, has been shaken by the spread of the euro zone debt problem to Italy and Spain and by fears that the recovery of the US economy may be faltering.

Share market investor confidence also slumped in recent weeks after Standard & Poor’s cut the credit rating of the world’s biggest economy and the debt crisis in Europe threatened to escalate.

Reflecting the fears of slower economic growth, Bank Negara has so far raised borrowing costs only once this year to three per cent as compared with three increases in 2010 despite inflation hitting its highest level in two years in June.

  1. #1 by DAP man on Wednesday, 17 August 2011 - 7:57 pm

    Why are Malaysian being fooled by Najib again and again? Why do Malaysians trust this fox?

    Remember this saying:
    Once bitten twice shy.
    Thrice bitten go and die.

    All those who believe in Najib, please go and die!!

  2. #2 by yhsiew on Wednesday, 17 August 2011 - 8:49 pm

    Indonesia’s economy grew 6.5% in the second quarter of this year on the back of strong domestic consumption and rapid growth of exports and investment, the Central Statistics Agency (BPS) said. So don’t put the blame on the euro zone debt problem and fears that the recovery of the US economy may be faltering.

  3. #3 by limkamput on Wednesday, 17 August 2011 - 8:49 pm

    See the baloney of the global economy – before inflation can be contained, they started talking about slow down and therefore interest rate (the cost of money) must be kept to near zero. How long must this free lunch going on? Have we not realised by now that it is precisely because of zero cost of money that is spinning the global economy out of control. Every country thinks they can create fiat money and the governments everywhere think they can finance wasteful and ill-conceived welfare expenditure through money creation irrespective of national saving and fiscal deficit. If money can be created at will and if interest rate are always kept at near zero and below inflation rate, may I know what is the economic function of national saving. Modern economists and central bankers always think they are smarter than others. If they are so smart, why is the global economy including Malaysia’s so sickly. When we say the economy is slowing down, what precisely is slowing down – demand for food, shelter and medical care or is it the demand of endless entertainment, holidaying, ipad, iphone and starbuck coffee? We generate lots of economic growth, but for whom the growth benefits?

  4. #4 by asia on Wednesday, 17 August 2011 - 9:02 pm

    Wake up Malaysian

    Malaysia maybe already long lost in big debt

    They have already stolen billions Malaysia leaded our country living in debt to survival

    Will the Malay be proud if they found out this

    We must have an audit in our ministry of finance

    To do that the BN must step down first

    To reform the BN must step down first

    Wake up Malaysians don’t be like mentality problem in brain let those corrupted keep telling you lies

    In Euro and American standard

    All those corrupted politicians should already gone in history may already lock up

  5. #5 by dagen on Thursday, 18 August 2011 - 8:56 am

    What? Looks like we all got liwat real good by umno. And are we still to go on believing that stupid umno’s 2020 target of doubling our income? No. Dulu, sekarang and needless to say, selama lamanya, NOOOOOO.

    Nevertheless let us consider these factors, for argument sake. To hit that target in 10 yrs (we hv only 9 yrs left because umno wasted 1 precious yr already) we need to see 8% yoy growth and this is without taking inflation into consideration. With 9 yrs, of course we would need a little bit more than 8%.

    But never mind. What the heck, really. 8% or a little more than 8%, what’s the diff? Esp when jibby jib had all these times been screaming of 6% target growth only. So for sure we are gonna miss the 2020 target anyway. Jibby jib has no real intention to double our income by 1 jan 2020. Its only a rhetoric à la jibby jib. And that is clear. “W” jibby tongue, “W” jibby tongue. Na na. Na na. Jibby “W” tongue.

    Well, so the more relevant issue now must be this: by how much would we be off-target? That is the question which is worthy of a billion ringgit (umno’s current standard, mind you).

    We had a 4% growth in the second quarter of 2011??!! Gosh! And inflation rate stood at 3 point wot? 4 percent? Pharrk. So doesnt that set our net growth back to only huh OMG 0.6% in the second quarter of 2011? Assuming that jibby the jib could somehow manage an average growth (minus inflation) of say wot? 3.5% maybe 4% over the remaining 9 yrs we would see a 1.4 times growh in our income in the morning of 1st jan 2020. As against the targeted 2.0 times growth, umno would miss the target by a hefty 30%. This is my prediction, of course. And I made this prediction based on some very raw and basic info. Then again what else do we know? How much more do we know? Nothing really except “rahsia” this and “rahsia” that.

    So people, if your income today is 3000, come 2020 it will (effectively) become RM4200 only, not 6000.

  6. #6 by monsterball on Thursday, 18 August 2011 - 9:38 am

    All know that our government is a bunch of thieves and robbers that always have plenty reasons for no or slow growths….ignoring the fact that all Asian countries grow by leaps and bounds ….even though they have no oil to export…making billions each year.
    yea….vote BN out…all problems solved.
    It just make sense and it is the right move.

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