Tough to meet 6-7pc growth target for 2012, says Husni
KUALA LUMPUR, May 22 — Malaysia will find it “very tough” to meet Putrajaya’s initial six to seven per cent GDP growth target this year as top trade partners for its export-oriented economy continue to struggle, Second Finance Minister Datuk Seri Husni Hanadzlah said today.
He told reporters that the government would instead focus on the central bank’s revised target of between four and five per cent, which is lower than the growth of 7.2 per cent and 5.1 per cent in 2010 and 2011 respectively.
“It will definitely affect our growth. Our earlier projection of six to seven per cent will be very tough. The first quarter’s positive trade balance will be affected as export growth will be smaller compared to previous years.
“It will affect our trade but the quantum is not yet known,” Husni (picture) said when asked about China’s growth suddenly cooling amid stuttering recovery in the United States and the persistent euro-zone crisis.
The three markets make up three of Malaysia’s top four trade partners with dismal economic data for April last week suggesting that China was heading for a sixth straight quarter of slowing growth, raising alarm bells in financial markets already worried about a slump in the euro zone.
But ahead of tomorrow’s Q1 GDP announcement, the Tambun MP said Malaysia was “lucky” because “we trade with many countries.”
“Five years ago our largest trading partner was the US but now it is Asia and ASEAN,” he said, adding that projections for 2012 had already factored in the possibility of a Greek default which will send shockwaves throughout Europe.
A Reuters poll of economists found that GDP growth for the first quarter of this year will likely fall to 4.5 per cent, a third consecutive drop since the 7.2 per cent recorded in Q2 2011.
The business wire also reported that Malaysia’s export growth in the first quarter more than halved to 4.4 per cent from 9.9 per cent in the fourth quarter.
Strong economic growth is crucial for the Najib administration’s plans to cut the fiscal deficit with public debt at RM455.7 billion or 53.8 per cent of GDP at the end of last year, just shy of a statutory ceiling of 55 per cent.
The government has announced a slew of construction projects for intra-city rail and highways in the coming years, using infrastructure projects to stimulate the economy.
The government’s New Economic Model (NEM) forecasts more investments from the private sector although a number of the companies have Putrajaya’s sovereign wealth funds as their majority shareholders.
Putrajaya is also betting on development in the Iskandar region in Johor and various projects around the country to push Malaysia into the club of high-income nations.