MALAYSIA'S ECONOMY TO GROW AT 5.4 PCT NEXT YEAR

KUALA LUMPUR, Aug 29 (Bernama) -- Malaysia's economy will be broad-based next year, with growth expanding by 5.4 percent from the anticipated 5.7 percent this year on strong domestic demand, the Finance Ministry said.

While the high fuel and food prices could continue to dampen consumer and business activities on the domestic front, firm commodity prices, steady income growth and favourable employment conditions coupled with the government's pro-active measures to alleviate consumers' burden are expected to mitigate these impacts.

"The increased Ninth Malaysia Plan spending and speedier implementation of various growth corridor development projects are also expected to augment the domestic demand," it said in the 2008/2009 Economic Report.


Although the knock-on effects of global high oil prices and inflationary
pressures would continuously impact the global economy in 2009, the Treasury
said the slowing demand worldwide is also expected to stem the boom in commodity
prices and inflationary pressures.

However, the global economy is expected to stabilise and recover gradually
in the second half of 2009, it said.

In addition, the ministry said steady economic outlook in the Asian and
other emerging economies arising from their resilient domestic demand are
expected to support the external sector and cushion the weaker demand from
developed economies.

The ministry noted that growth in the Malaysian economy would continue to
be
led by the services and manufacturing sectors.

The services sector is anticipated to post a firm growth rate of 6.9
percent
in 2009 from an expected 7.1 percent in 2008, supported by broad-based expansion
in all sub-sectors.

The wholesale and retail trade sub-sector is expected to be bolstered by
steady household spending as well as higher tourist arrivals, with the
accommodation and restaurant sub-sector benefiting from these
developments.

Growth in the finance and insurance sub-sector is projected to strengthen
further contributed by increased fee-based activities and innovative financial
products.

The manufacturing sector is expected to grow 4.3 percent from an expected
4.7 percent this year on account of stable performance of the export-oriented
industries and continued expansion in domestic demand.

The electrical and electronics industry is projected to improve slightly
led
by demand from the emerging markets while that of resource-based industry is
expected to remain firm arising from strong demand for petroleum products,
plastics and chemicals as well as rubber-based products.

As for the agriculture sector, it is envisaged at 3.7 percent from an
expected 3.6 percent this year on account of expansion in food production and
the sustained growth of palm oil and rubber.

In the plantation sector, palm oil production is forecast to be sustained
at
1.3 percent amid improved yield and expansion in matured areas while rubber
production is expected to increase on account of higher output from better
quality clones and improved tapping techniques.

The mining sector is expected to strengthen by 3.4 percent from an
anticipated 2.8 percent this year with growth emanating from production of crude
oil and gas.

Meanwhile, the construction sector is projected to grow at 3.1 percent next
year compared with four percent this year driven by civil engineering
sub-sector, with the implementation of infrastructure projects under the Ninth
Malaysia Plan as well as continued exploration activities in the oil and gas
industry.

The faster pace of the corridor developments is also expected to spur
construction works while the residential sub-sector is expected to perform
favourably with further incentives to encourage house ownership and increased
allocation for low-and-medium cost housing projects.
-- BERNAMA