MALAYSIA'S GDP TO SHRINK IN 2009

From D. Arul Rajoo

BANGKOK, March 31 (Bernama) -- Growth in Malaysia, Singapore and Thailand,
South-East Asia's three most export-orientated economies, will contract this
year, the Asian Development Bank (ADB) said in a report, Asian Development
Outlook 2009, released Tuesday.

Malaysia's growth, which grew by 4.6 percent in 2008, is likely to see
-0.2 percent growth in 2009 before recovering to 4.4 percent in 2010, it said.

The Manila-based ADB said South-East Asia's growth was projected to dwindle
to just 0.7 percent in 2009, down from 4.3 percent in 2008, with the most open
of these economies, Singapore, likely to shrink by five percent.

Other countries that are projected to see negative growth this year are
Thailand (-0.2 percent) and Brunei (-0.4) while Laos would grow by 5.5 percent,
Vietnam 4.5 percent, the Philippines and Cambodia both by 2.5 percent.

"The short-term outlook for the region is bleak as the full impact of the
severe recession in industrialised economies is transmitted to emerging
markets," said ADB acting chief economist, Jong-Wha Lee.

The report said developing Asia's economic growth would slow in 2009 to its
most sluggish pace since the 1997/1998 Asian financial crisis, forecasting just
3.4 percent in 2009, down from 6.3 percent last year and 9.5 percent in 2007.

If the global economy experienced a mild recovery next year, the outlook for
the region would improve to six percent in 2010, it said.

While China is expected to expand by seven percent in 2009 on the back of
massive fiscal stimulus measures rolled out by the government, three economies
in the sub-region -- Hong Kong, South Korea and Taiwan -- are likely to contract
as their economies are hit hard by a sharp drop in demand for exports.

The report forecasts that in 2009 Hong Kong would record -2 percent growth;
South Korea -3 percent; and, Taiwan -4 percent.

South Asia, though not as open to trade as other regional economies, is also
expected to lose steam, with India's growth slowed to 7.1 percent for 2008 and
likely to drop to five percent in 2009 as the intensifying crisis further dents
business and consumer confidence and causes a major reduction in capital
inflows.

The report said despite the dismal outlook, the region was in a much better
position to cope with this crisis than it was in 1997/98, citing the large
foreign currency reserves and steadily declining inflation rates that would
provide policymakers with the necessary tools to nurse their economies through
the hard times ahead.

ADB said deteriorating economic prospects would hinder the efforts to reduce
poverty as more than 60 million people in 2009, and close to 100 million people
in 2010, would remain trapped in poverty -- living on less than US$1.25
(US$1=RM3.62) a day -- than would have been if growth had continued at its
earlier pace.

The report said the region's slowdown underlined the risks of excessive
dependence on external demand, and developing Asia must adopt a mix of policies
that would bolster demand and use resources more efficiently.

"Rebalancing growth is in developing Asia's interest. A more balanced
approach can boost social welfare by using its savings more productively and
help to reduce global imbalances that helped feed the current crisis," Lee said.

-- BERNAMA