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Malaysia's exports shrink sharply in December

Agence France Presse - February 12, 2009

Kuala Lumpur – Malaysia's exports shrank 15 percent in December as flagging global demand took its toll, official data showed Thursday.

The bigger-than-expected slowdown in exports marked the third consecutive monthly contraction. Economists said exports could plunge even further as the world economic crisis deepens.

Exports dropped to 46.09 billion ringgit ($12.8 billion) in December while imports decreased 23 percent from a year earlier to 34.4 billion ringgit ($9.6 billion), Malaysia's trade ministry said in a statement. For all of 2008, exports grew 9.6 percent while imports fell 3.3 percent, resulting in a trade surplus of 142 billion ringgit ($39.5 billion).

Economists attributed the annual exports growth to strong commodity prices in the first half of the year, but said prices have fallen since then while global demand for goods stagnated in the fourth quarter.

"It will get worse as long as the global slowdown persists," said Gundy Cahyadi, economist with research firm IDEAGlobal in Singapore.

IDEAGlobal expects Malaysia's exports to contract at a double digit rate this year. The firm recently cut its 2009 growth forecast for Malaysia to 1-1.5 percent from 3.2 percent, and much lower than the government's target of 3.5 percent.

Trade Minister Muhyiddin Yassin has also predicted exports in 2009 may decline for the first time in eight years amid weaker demand from the US, Japan and Europe – Malaysia's key trading partners.

The trade ministry said exports of electrical and electronic goods, which account for 38 percent of total shipment, fell 3.4 percent last year. But overseas sales of palm oil soared 46 percent, crude petroleum by 31 percent and liquefied natural gas by 56 percent, it said.

The government is due to unveil a second stimulus package on March 10 to prevent a recession, after saying in November it would inject 7 billion ringgit ($2 billion) this year to boost growth.

It will also cut electricity tariffs from March and may further liberalize non-financial services sectors to cut the costs of doing business to woo investors.

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