Bank Negara statistics prove 'worst is really over'

BANK Negara yesterday released a set of statistics to prove that the worst is really over for Malaysia, and the good report eard is expected to result in a "much smaller contraction" in the gross domestic product growth for the first quarter of the year.

The figures also showed that the turnaround started in the third quarter of last year, following the introduction of selective capital controls in September which has provided the country with "a stable route to recovery".

The central bank's adviser Datuk Nor Mohamed Yakcop, in releasing the figures, said: "These charts have shown that the worst is really over."

Criticised by many initially, the selective . capital controls have without doubt provided a breather to exporters, bankers and just about anyone who needed to know for sure that the ringgit would not be fluctuating so much for him to plan ahead.

"Things started to change with the introduction of the exchange rate control as shown by the various indices. With that, everything takes its own course," Nor said.

The first good indicator on the report card is the often quoted uptrend of the Kuala Lumpur Stock Exchange Composite Index which has recovered from the lowest level of 262.7 points with a market capitalisation of RM181.5 billion on Sept 1 to 758.10 points yesterday with a RM479 billion market capitalisation.

The rally also showed investors' confidence has returned to the market.

Secondly, Bank Negara's international reserves went up to US$29.7 billion (RM112.86 billion) as at May 15 compared to US$20.2 billion on Sept 1.

This is sufficient to pay for 6.5 months of retained imports compared to 3.8 months last September.

The figure is "historic as it is far better than the good old days of between three months and four months of retained imports".

Bank Negara's figures also showed a total net inflow of some RM2 billion as at May 21.

More than 6,000 new accounts were established for new capital that came in since Feb 15.

The accounts were set up to distinguish foreign funds other than foreign direct investment which came into the country prior to Feb 15, and those that came in on or after the date following the introduction of exit levy on repatriation of portfolio capital.

Malaysia's gross exports also grew to US$6.8 billion and gross imports to US$5 billion in March compared with US$5.8 billion and US$4.3 billion respectively on Sept 1.

Malaysia's trade in March totalled US$1.8 billion compared with US$1.5 billion on Sept 1.

The trade surplus in March is the 17th consecutive month since November 1997 that Malaysia has continued to maintain its trade surplus record.

It is understood that these days, many banks are lending "quite well", particularly for viable projects now that there is ample liquidity in the financial system.

Overall, a "positive" GDP is expected for the entire year in line with the Government's earlier forecast that a one per cent GDP growth is achievable this year.

The Department of Statistics is expected to announce the first quarter GDP at the end of the month or early next month.

Article extracted from New Straits Times, Malaysia


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