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Malaysia To Benefit From Increased Demand For Exports
Printable version


WASHINGTON, April 22 (Bernama) -- Malaysia is among the emerging East Asian countries expected to benefit from the strong recovery in the United States and Japan, increased demand for exports, and the long-awaited rebound in the high-tech sector, said the latest World Bank report on the region.

The outlook for the region is very positive both for the big countries and for the smaller ones," said the World Bank's regional vice president for East Asia and Pacific, Jemal-ud-din Kassum, here.

Fuelled by growing exports, low interest rates, and high investment in China, Vietnam, and Thailand, East Asia's economy is expected to grow by more than 6.0 percent in 2004, the strongest since the beginning of the global slowdown in early 2000, according to the latest East Asia and Pacific Regional Update, the World Bank's twice-yearly look at the region's economies.

In another positive sign for the region, domestic and foreign investment are also showing signs of recovery.

Net portfolio flows to six large regional economies -- China and the five post-crisis economies, Indonesia, South Korea, Malaysia, the Philippines and Thailand -- are estimated to have jumped to around US$33 billion (US$1=RM3.80) from a net outflow of US$9 billion in 2002.

Foreign direct investment (FDI) into China has remained stable at about four percent of its GDP since 1990, while South Korea, Malaysia, the Philippines and Thailand are receiving about 2.0 percent of GDP or about the same as the world average.

FDI inflows to the six main East Asian economies were estimated at about US$60 billion in 2003, about US$1.5 billion higher than in 2002. But of this total, about US$53.5 billion went to China and only about US$6.5 billion to the other five economies, Indonesia, South Korea, Malaysia, the Philippines, Thailand, whose combined share of FDI continued to fall while China's share rose.

Increasingly other regional economies are also looking forward to solid investment growth, the World Bank said.

Looking ahead, a combination of low interest rates, availability of credit, and higher corporate profits and productivity are an impetus to an upturn in investment spending around the region, it added.

"By the end of 2003, the low and middle-income countries of the region were growing at a combined rate of 7.6 percent, their fastest rate since 1996. This strong recovery to pre-crisis levels of growth also bodes well for the region's poor, with an estimated 49 million moving above the US$2 a day line in this latest upsurge," Kassum said.

Global investment in information and communications technology and high tech electronics has rebounded and is rapidly growing, to the benefit of many Asian economies. This recovery will likely further growth in intra-regional production and trade networks, centred on China, which is taking in a growing number of its neighbours' exports.

Long the driver of regional growth, China's imports surged 40 percent in 2003, and figures from the first quarter of 2004 showed continued growth, fuelled by demand for inputs to its manufactured exports, mostly from China's neighbours.

Intra-regional trade still accounts for around 70 percent of the growth in exports of East Asia's developing economies, as has been the case for the past three years.

The World bank said,"But this trend will surely slow as China cools from its current rapid growth rates. The Chinese authorities are working hard to slow the country's pace of growth to a more manageable level.

"To do this, they must balance the need to continue creating jobs and reforming the economy while keeping the economy stable and slowing down excessive investment, the report says. Just what effect this slow down will have on China's neighbours remains to be seen.

"Although it is true that slower growth in China would hurt other economies in the region, our view is that the impact would be modest," said Homi Kharas, the World bank's chief economist for the East Asia and Pacific Region.

"Even a 10 percent reduction in the growth of China's imports would result in a loss of less than one percent of gross domestic product (GDP) in South Korea and Taiwan and less than half of one percent GDP in a country like Thailand.

And if this slowdown took place in 2004, it would be offset by an acceleration of Japanese imports from the region and higher global trade growth."

-- BERNAMA

 

 
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