Asia Times: More than mere recovery, says Daim



	October 30, 1999	atimes.com

Southeast Asia

More than mere recovery, says Daim

KUALA LUMPUR - The Malaysian economy for 1999 has not only recovered from the deflationary impact of the regional financial crisis but has performed beyond expectations, says First Finance Minister Daim Zainuddin. ''We have come a long way in moving our economy ahead, beyond the crisis,'' he said in the preface to the Treasury's 1999/2000 Economic Report.

The strong recovery largely resulted from adopting an expansionary fiscal policy, easing monetary policy and adopting selective exchange controls, he said. The exchange controls were implemented on September 1, 1998, to insulate the economy from externally generated risks in order to restore stability and revive economic activities.

''Investor confidence has also been revived as stability returns to the financial markets, following the imposition of selective exchange controls, improvement of economic fundamentals and the introduction of measures to strengthen the banking system,'' said Daim.

The second quarter of 1999 witnessed growth of 4.1 percent in the Gross Domestic Product (GDP), and is poised to see even higher growth in the second half of the year. ''For the whole of 1999, we should be able to record a real GDP growth of 4.3 percent,'' said Daim, explaining that the GDP turnaround had been accompanied by a significant strengthening of macroeconomic fundamentals. The balance of payments, boosted by the stronger volume of exports, created a large surplus which contributed to a significant increase in external reserves.

The economic recovery has taken place in an environment of low inflation and improving employment prospects. The Kuala Lumpur Stock Exchange benchmark index and market capitalization has more than doubled since September 1 last year which, coupled with higher disposable income and a prevailing regime of low interest rates, has encouraged a recovery in private consumption. ''All these positive developments have broadened the base of the economic recovery and provided a stronger foundation for the economy to return to strong and sustainable growth in the next millennium,'' the Finance Minister said.

Despite the progress achieved so far, Daim warned the country to remain aware of instability returning to global financial markets. He urged Malaysians to continue protecting their interests because international markets could still prove dangerous. ''Recognising that there remains no room for complacency, the commitment of all rakyat (citizens) is required to ensure the sustainability of growth in the near- and medium-term,'' he added.

Daim praised both the private and public sectors for the confidence they had placed in the government's approach and their pragmatism in addressing the crisis, saying ''I believe that, with your continued support, we can together look forward to a higher plane of economic development in the millennium.''

(Asia Pulse/Bernama)

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©1999 Asia Times Online Co., Ltd.