24 February, 2010

Malaysia’s Economic Performance In The Fourth Quarter 2009


The Malaysian economy registered a growth of 4.5% (3Q 09: -1.2%) in the fourth quarter of 2009, amid strengthened domestic and external demand. For the year 2009, the economy contracted by 1.7%, lower than -3% that was projected earlier (2008: +4.6%).
Sustained growth in private consumption expenditure and increased public sector spending contributed to higher domestic demand, which recorded a growth of 3% in the fourth quarter (3Q 09: 0.4%). 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.
The public sector continued its key role of providing impetus to growth during the quarter. Public sector consumption expenditure expanded further by 1.3%, while public sector capital spending increased substantially as the implementation of projects under the fiscal stimulus packages gained further momentum during the quarter. During the quarter, the development expenditure of the Federal Government amounted to RM17.6 billion (3Q: RM11.6 billion), an increase of 9.5% compared with the fourth quarter of 2008.
The accelerated implementation of Government’s two stimulus
packages has been a key factor in contributing to the economic
recovery. To date, over  113,000 projects under the 2 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 RM 1 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. From Mac 2009 until today, the government has filled 38,495 of  the 50,000 vacant posts in the Federal Civil Service. In addition, the government has recruited 11,131 officers on contract basis in government agencies.  The contract for services and jobs under the stimulus package are temporarily created jobs by the government in order to lessen the effect on the affected groups. These contract officers shall continuously make an effort to find permanent jobs for themselves in the market place.
The government through its agencies and Government Linked Companies (GLC) in collaboration with private sector have provided 100,000 training opportunities and job placements that have benefited the service industry workers, graduates, retrenched workers, single mothers, disabled workers, youth and apprentices. For example, a total of RM230 million has been disbursed to the State’s Skills Training Centre to implement the technical training programmed and from that amount, RM169 million has been utilized and benefited 13,916 industry workers, retrenched workers and apprentices. Overall, conditions in the labour market have improved significantly in the fourth quarter, with the total retrenchments declining  to 2,125 persons compared with 12,590 persons in the first quarter of 2009.
There were emerging signs of stabilisation in 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% during the quarter (3Q 09: -7.9%).
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%, reflecting the improvement in both external and domestic demand. Activities in the construction sector expanded strongly by 9.2%, benefiting primarily from the accelerated implementation of projects under the fiscal stimulus packages and the Ninth Malaysia Plan (9MP). Continued progress in the implementation of major infrastructure projects such as the electrified double-tracking rail project and roads, together with the construction of low- and medium-cost houses as well as the upgrading and maintenance of schools and hospitals contributed to the strong performance of the construction sector.  The commodities sector also experienced improved performances, particularly in the agriculture sector, which benefited from higher external demand and stronger commodity prices.
On the external sector, Malaysia’s exports performance recovered to record a positive growth of 5.1% (3Q 09: -22.4%), supported by improvements in external demand, particularly from the regional economies, and from stronger commodity prices.
Malaysia also continues to receive foreign direct investment (FDI). In the fourth quarter of 2009, gross inflows of FDI increased to RM7.2 billion (3Q: RM6.7 billion), with investments mainly in the manufacturing and services sectors.
Overall, the Malaysian economy has turned around and recovered from the implications of the global crisis. The rapid and proactive implementation of expansionary fiscal policy measures, accommodative monetary policy and comprehensive measures to ensure continued access to financing has had a very important role in mitigating the impact of the global recession on the Malaysian economy and in bringing about the rapid resumption of growth in the economy.
Dato’ Sri Mohd Najib 
Putrajaya
 
24 February 2010
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