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ECONOMIC
PROSPECTS FOR 2002
Mr Speaker Sir,
Global economic growth and world trade in 2002 are expected to remain
uncertain. We are unsure whether the United States will be able
to avoid an economic recession. However, we also expect that the
recovery ofthe US economy will be delayed. The prospect for recovery
of the Japanese economy is also not encouraging. Given the less
favourable external environment, the nation's economic growth will
be driven by domestic economic activities. Our economic growth is
expected to increase between 4 to 5 per cent in 2002 with Gross
National Product (GNP) remaining high at 370 billion ringgit. All
major economic sectors will continue to record growth, mainly led
by the manufacturing and services sectors. The increase in the growth
of the manufacturing sector is expected to be driven by the recovery
in global demand for electronics while the services sector will
be supported by the continued pick-up in domestic economic activities.
Domestic demand at current prices is expected to increase by 5.5
per cent, mainly on account of the growth in private sector expenditure
of 6.6 per cent. The public sector, however, continues to grow,
albeit, at a slower rate of 3.1 per cent.
The economic prospects remain encouraging given the nation's strong
economic fundamentals. External reserves has stabilised at a higher
level of 113.7 billion ringgit or 29.9 billion US dollars as at
15 October, sufficient to finance 4.7 months of retained imports.
The external trade balance recorded a surplus for 46 consecutive
months since November 1997 through August this year. Gross National
Savings is still at a high level at one-third of GDP. The banking
system continues to strengthen with the risk- weighted capital ratio
at 12.6 per cent, which is above the international standard of 8
per cent. The level of short-term debt is low at 5.2 per cent of
GDP, while the debt service ratio remains sustainable.
With higher GDP growth, per capita income is expected to increase
by 4.7 per cent to 13,962 ringgit in 2002 compared to 13,333 ringgit
in 2001. With inflation at a low level, per capita income in terms
of purchasing power parity will increase by 5.1 per cent to 9,403
US dollars in 2002 from 8,944 dollars in 2001, reflecting the higher
purchasing power of the rakyat.
The Government will continue to implement unconventional measures
based on our own approach which have proven to be successful and
effective in managing the economy. In this regard, the ringgit peg
will be maintained. However, the Government will continue to monitor
domestic and external developments to ensure that the value of the
ringgit is consistent with the nation's macroeconomic fundamentals.
Given the volatility in foreign exchange markets, the Government
will ensure that the ringgit exchange rate remains stable.
The growing difficulties in the global economy occurred at a time
when the nation is just into the first year of the Third Outline
Perspective Plan and the Eighth Malaysia Plan. To achieve the long-term
objective of Vision 2020 for Malaysia to become a developed nation,
both Plans envisaged an average annual growth rate of 7.5 per cent.
Since economic growth for 2001 and 2002 are expected to be lower,
we have to redouble our efforts to accelerate growth for the remaining
years of the Plans.
With the nation's economic fundamentals remaining strong, we are
confident of achieving our growth targets. However, we must redouble
our efforts towards realising this objective. Our experience during
the recent financial crisis has shown that we can successfully overcome
the worst recession, when economic growth contracted by 7.4 per
cent in 1998. The economy was able to rebound quickly in the following
years, enabling us to achieve the average growth target of 7 per
cent under the Second Outline Perspective Plan.
CONCLUSION
Mr Speaker Sir,
This year's Budget is tabled amidst an extremely challenging time
with increasing volatility in the external environment. While our
economic fundamentals remain strong, there exists several constraints
in the domestic economy that have to be overcome. We also face problems
of social ills and threats to national unity. Peace and stability
are the cornerstone of economic progress. Good planning and excellent
development plans will come to nought, if there is no peace and
harmony. Extremism has no place in our society. We have a truly
democratic process. Every rakyat has the right to elect the government
through the ballot box without resorting to violence or force of
arms or creating chaos. Extremism is against the principles of all
religions, more so in Islam, which promotes peace and prosperity,
Islam abhors those who create chaos as in verse 77 surah AI-Qasas
as follows: "and do thou good, as Allah has been good to thee,
and seek not mischief in the land, for Allah loves not those who
do mischief', It is not mentioned in the verse that we should do
good only to Muslims. As long as others are not our foes, we should
do good and be fair to them.
Mr Speaker Sir,
During the past four decades, the nation has achieved excellent
economic progress and has been a model to the world. The progress
that we have achieved has not come easy. It is also not solely attributable
to our abundant natural resources. Our success has been accomplished
through our planning, our policies and strategies, our efficient
administration untarnished by widespread corruption, our peace and
stability as well as our upholding of religious values. Of utmost
importance is the rakyat's unwavering support and untiring efforts
as well as their sacrifice. Keranamu Malaysia.
Social cohesion builds a strong nation. A society which is self-reliant,
upholds noble values and practises good ethics, tolerant, caring
and just as well as equipped with knowledge will propel the nation
towards greater progress and achievements.
We pray to the Almighty to bless us with strength, resolve and perseverance
to face all adversities, bestow us with courage and determination
to strive for prosperity and uphold our nation's sovereignty. With
the Almighty's blessings, we will be able to build a peaceful, progressive,
harmonious nation, free from foreign pressure and well respected
by all.
Mr Speaker Sir,
I beg to propose.
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