Malaysian Economy to Moderate to 4.2 Pct This Year

KUALA LUMPUR, July 17 (Bernama) -- Malaysia's economic growth is expected to moderate to 4.2 per cent this year against 5.1 per cent recorded last year, says the Malaysian Institute of Economic Research (MIER). It said domestic demand is expected to remain the main economic growth driver given the negative external developments. "Private and government consumption will continue to be the key economic growth drivers," MIER said in a statement. It said the economic growth pace in the first quarter moderated to 4.7 per cent due to slower growth in public consumption and net exports. The services sector is expected to continue playing an important role in driving the economy but recent data, however, suggest there is a distinct possibility that services activity might slow down. Meanwhile, the results of the second quarter MIER Business Conditions Survey (BCI) which covered the manufacturing sector indicated a slower expanding manufacturing sector. The BCI also revealed that sales, domestic and export orders in the third quarter would deteriorate and employment prospects are likely to remain subdued. "Production volume would also drop further," the survey said. However, MIER's Consumer Sentiment survey said households headed into the second quarter with confidence and they are going into the third quarter with hope. "For consumers, things are looking up for now and they are keeping their fingers crossed for better times ahead," it said, adding that shopping for major durables would be well on the cards in the coming months and would certainly bode well for the economy. "Watch out, however, for the latest minimum wage initiative by the government for if production cost rises, battling higher consumer prices will be an ardous affair, besides derailing consumer spending plans," the survey said. -- BERNAMA