The Star Online : Budget 2010

The Economic Report

Friday, October 23, 2009

Sustaining economic recovery

THE thrust of the fiscal policy in 2010 is to strengthen and sustain the recovery process of the economy by boosting domestic demand.

Decline in manufacturing sector seen to be bottoming out

MANUFACTURING output contracted 14.8% in the first eight months of 2009 on sharp deterioration in export and domestic oriented industries. Sales value of manufactured products declined 24.7% to RM299.8bil.

Economy boosted by stimulus

THE Malaysian economy is expected to benefit from ongoing measures globally to stabilise economic conditions through fiscal measures and loose monetary policy, as growth is projected to rebound into positive territory in 2010.

Value-added services sector grows a little

DURING the first half of 2009, the value-added services sector grew marginally by 0.7% (January-June 2008, 8.2%), due to decline in trade and consumption-related activities.

Budget 2010 Official website

Liberalisation measures to boost services sector

IN a bid to make Malaysia more attractive to foreign investors, the Government has announced liberalisation measures in the services sector.

Economic decline narrowed in Q2

AS an open economy, Malaysia was adversely affected by the global financial crisis and economic downturn.

Construction expands 2% in H1

THE construction sector expanded 2% during the first six months of 2009, attributed to strong performance of residential, non-residential and special trade works sub-sectors.

Agriculture sector contracts 2%

THE agriculture sector contracted 2% during the first half of 2009, mainly due to lower production of palm oil.

Value-added of mining down on weak demand

VALUE-ADDED of the mining sector contracted 3.9% in the first half of 2009 on lower crude oil output and natural gas. The sector was affected by weak demand from major importers and lower prices.

High priority on human capital development

THE 2009 Budget put a high priority on human capital development by continually implementing programmes in creating a pool of trained and competitive workforce.

Efforts to bolster nation’s resilience

TO strengthen the nation’s resilience, the Government has focused on providing a conducive environment for private investment, accelerating regional corridor development, setting national key result areas and realising tourism potential, among others.

Well-being of rakyat in the spotlight

THE 2009 Budget with the theme “A Caring Government” focuses on the well-being of the rakyat where one of its main strategies includes continual allocation of resources to ensure inclusive growth, especially for the marginalised and vulnerable groups.

Exports to contract by 20% in 2009

EXPORTS are likely to remain weak this year with an estimated contraction of 20% to RM530.6bil (2008: 9.6%; RM663.5bil) due to the poorer demand for manufactured goods and lower commodity prices.

Domestic demand to remain resilient

DOMESTIC demand is expected to remain resilient with growth of 1.5% in 2009, fuelled by higher public expenditure, which is estimated to grow 12% (2008: 6.3%) while private expenditure contracts 2.4% (2008: 7%).

Seeking ideal debt level

THE Government will ensure that debt level remains sustainable through the adoption of sound macro-economic policies and efficient debt monitoring system.

Stimulus impact to be felt in Q3

THE full impact of the two stimulus packages worth RM67bil is expected to be more significant in the third and fourth quarters of the year, with spillover effect next year.

State govts see lower current account surplus

THE consolidated financial position of state governments is projected to record a lower current account surplus of RM7.2bil (2008: RM8.9bil) due to higher operating expenditure and a decline in revenue.

Faster implementation of stimulus packages sought

THE Government has announced two stimulus packages amounting to RM67bil to boost the nation’s economy during the global downturn and they have begun to show positive effects.

Global financial crisis shows flaws in system

THE global financial crisis proves that the current financial system is fundamentally flawed and the international financial architecture must be reformed to prevent the recurrence of such crisis and ensure sustained economic and financial stability.

External trade contraction easing

MALAYSIA’S external trade has taken a beating this year as a result of the current global economic downturn but the good news is that the contraction has been easing.

Fiscal policy helps counter impact of crisis

FISCAL policy assumed greater significance this year to mitigate the impact of global slowdown on the domestic economy.

Foundation for new economic model

THE Budget 2010 lays the foundation for the new economic model and the formulation of the 10th Malaysia Plan.

Ringgit likely to strengthen

AS the US economy continues to reel from the impact of the global economic downturn, economists expect the ringgit to strengthen against the greenback with the improving economic outlook for Asia’s emerging markets like Malaysia.

Focus on growth

THE focus of monetary policy in 2009 is on growth amid abating inflationary pressures and an adverse external environment. The overnight policy rate (OPR) was lowered 150 basis points (bps) to 2.00% to reduce the cost of borrowing.

RM6.1b okayed for guarantee schemes

AS of Sept 30, a total of 4,358 applications worth RM5.7bil were approved for the Working Capital Guarantee Scheme (WCGS) while the Industry Restructuring Financing Guarantee Scheme (IRFGS) drew less response, with only RM429.3mil loans approved to 133 companies.

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