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US recession won’t hurt Malaysia much

BACHOK: The Finance Ministry does not expect Malaysia to be drastically affected if the United States, which is the world’s largest economy, spirals into recession this year due to external and internal issues.

Deputy Minister Datuk Dr Awang Adek Hussin said that while there may be some effects, the country’s gross domestic product (GDP) figure was still poised to register a 6.5% forecast growth.

The economy’s positive factors are driven by the global appreciation of commodity prices, healthy domestic consumption and high crude oil price momentum.

“Our fundamentals should remain steady despite worries about the US economy. We are not unduly worried even though the price of crude oil has touched US$100 a barrel as we also benefit to a degree,” he said after attending the opening of a bridge in Kampung Kual here.

Malaysia remains a net exporter of oil through Petronas although there is concern that a continued price increase can put pressure on the high subsidy costs being forked out by the national oil corporation to maintain relatively cheap domestic fuel prices, he said.

Dr Awang Adek was responding to reports quoting US-based economic institutions that there were signs of a recession following the release of the country’s unemployment rate percentage, which recorded higher than anticipated figures for the last quarter of 2007.

This also comes on the back of continued high fuel prices, rising cost of living and impact from the US property subprime market.

To this, Dr Awang Adek said Malaysia’s strength in commodities such as palm oil and rubber would pay dividends as there was a surge in demand for them, while healthy domestic consumption indicated confidence among consumers about the economy.

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