(Petaling Jaya, Friday): The admission by the Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim, yesterday that Malaysia’s GDP growth this year is unlikely to be 4 to 5 per cent is long overdue.
In the first 1998 Budget presented to Parliament on October 17 last year, Anwar had forecast a 7% GDP growth for this year. Less than two months later, in the second 1998 Budget announced on December 5, Anwar revised downwards the GDP growth forecast this year from 7% to 4-5%.
Two weeks later, on December 19, 1997, the International Monetary Fund gave a much lower forecast of 2.5% GDP growth for Malaysia this year in its Interim World Economic Outlook.
For the past two-and-a-half months, I have been asking the government to respond to the IMF’s lower forecast for GDP growth for Malaysia this year, especially as since then, the other Asian countries have been drastically chopping their economic growth forecasts, even from zero growth to negative growth rates.
Two weeks ago, the Singapore government slashed its forecast for economic growth this year to between 2.5% and 4.5% from between 5% and 7% previously. In actual fact, economists are even predicting a 1% GDP growth for Singapore for 1998.
In refusing to revise its GDP growth forecast for this year, the Malaysian goverment is holding out that it would be the fastest-growing economy in the Asia-Pacific outside China this year, which can only retard the whole process of confidence-restoration as highlighting the seriousness of the "denial syndrome" of the Malaysian government - nine months into the economic crisis!
This is why I welcome Anwar’s more realistic comments in his interview with the Asian Wall Street Journal yesterday, where he said that he was optimistic that economic growth could "exceed 3%, given the figures we’ve seen so far".
Anwar’s second downward revision of GDP growth this year to "exceed three per cent" is more realistic and confidence-restoring than claiming that Malaysia would be the fastest-growing economy in Asia-Pacific outside China this year
The official opening of Parliament by the Yang di-Pertuan Agong on March 23 is an occasion for the government to report to the people the state of the nation and the economy, and I would urge the Government to use the Royal Address to give a full and detailed report on the national economic recovery strategy, the efforts and success which have been achieved so far to effect an economic turnaround and the government’s latest forecast about the GDP growth for this year as well as the economic prospects for 1999 and 2,000.