'If we have a government that faces no financial constraints, we can do many things,' said Mr Nor Mohamed. -- PHOTO: REUTERSKUALA LUMPUR - MALAYSIA'S economy is going to suffer in the first couple of quarters this year, a top minister was quoted as saying on Saturday, as the export-dependent country battles dying growth.
'The first two quarters are going to be bad,' Second Finance Minister Nor Mohamed Yakcop told the Edge financial weekly.
Malaysia on Tuesday announced a 60 billion ringgit (S$27 billion) stimulus package to boost the economy.
Mr Nor Mohamed said the stimulus package will add 2.5 per cent to 3 per cent to the economy, and that in its absence the economy will contract by at least 2.5 percent.
Malaysia's growth came in at just 0.1 per cent in the fourth quarter, and the government also on Tuesday cut its 2009 growth estimate to a range of 1 per cent contraction to 1 per cent growth from an earlier expectation of 3.5 per cent expansion. Exports, worth more than 100 per cent of the South-east Asian country's gross domestic product, fell 28 per cent in January.
The stimulus package has been criticized by many economists for not including provisions for immediate relief, such as individual tax breaks and making money directly available to consumers to boost domestic demand.
Mr Nor Mohamed said this was because of Malaysia's growing fiscal deficit, which is officially forecast at 7.6 per cent of gross domestic product this year. Malaysia has been running a deficit for the last ten years.
'If we have a government that faces no financial constraints, we can do many things,' Mr Nor Mohamed said.
'But we start on the basis that money is limited, and for every ringgit that we spend there is of course growth, but there is also the deficit.' When asked by the newspaper whether the government had run out of options to help the economy, he left the probability of another boost open.
'... we say this is not the silver bullet, not the last bullet,' Mr Nor Mohamed said. -- REUTERS
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