Economic Highlights

10MP : EPU targeting GDP growth of 5.5% during 10MP

Economic Highlights (published 11 Nov 2009)

- The Economic Planning Unit (EPU) unveiled that the Government is targeting an economic growth of an average of 5.5% a year during the 10MP.

- We view the growth target as not very ambitious. Still, we understand that Malaysia could still achieve a developed nation by the year 2020, albeit a less prosperous one.

- We understand that the Government will allocate only RM180bn for development expenditure under the 10MP, of which RM15bn will be used as the PFI Facilitation Fund to serve as tipping-off for private projects to take off. This will generate at least RM50bn of private investment to make up the difference compared to the RM230bn allocated under the 9MP. However, we are concerned that the 3P procurement model will shift the burden of expenditure from development to operating, which is already stretched.



IPI : fell by a smaller magnitude of 6.0% yoy in September

Economic Highlights (published 10 Nov 2009)

- Industrial production fell by a smaller magnitude of 6.0% yoy in September, compared with -7.0% in August. This was the sixth consecutive month of improvement and the smallest decline in 11 months, suggesting that industrial activities continued to improve, albeit gradually.

- The smaller drop in output was due to a smaller decline in mining production. This was, however, offset partially by a sharper drop in manufacturing output and a slowdown in electricity output.

- As a whole, based on the preliminary numbers, we estimate that the contraction in real GDP is likely to have narrowed to 2.7% yoy in the 3Q, from -3.9% recorded in the 2Q. This was on account of a pick-up in domestic demand and a smaller decline in exports.