Macro profile 02/209
Budget deficit, but Current Account Surplus:
is this a "China-like" model of currency peg with dollar?
Benefit: they now have room to spend + big surplus ....so they can "lean agains the storm".
Malaysia is heading towards substantially higher budget deficits for the next two years, Fitch Ratings warned on Monday as it cut its outlook on the country’s local currency debt to negative.
Malaysia is expected to unveil a second stimulus package this month that is likely to be similar in size to a M$7bn spending measure announced in November.
Fitch said Malaysia was in a good position to withstand the global economic downturn in spite of the budget deficit increasing to an estimated 7.4 per cent of gross domestic product by 2010, up from 5.2 per cent last year.
GDP to slow: agency forecast that economic growth would slow to 1.5 per cent this year, from an estimated 5.5 per cent in 2008
mainstay electronics sector
foreign workers, who make up a fifth of the labour force
manufacturing exports and price declines for oil and palm oil, Malaysia’s biggest commodity industries and a main source of state revenues
Notes:
effectively under 1 party rule since independence from Britain in 1957.
risky but badly needed political reforms - reform legal system, and cut fuel subsidies
after 22 years of Dr Mathathir
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