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Malaysian industry output slows
KUALA LUMPUR, Malaysia (Reuters) -- Malaysia's industrial output grew just 1 percent in January from a year earlier, sharply slower than what the market expected, boosting the case for an additional government spending package, analysts said. Output rose a revised 7.3 percent year-on-year in December. "These are surprisingly bad numbers. The external impact on the economy has started to show," said Manokaran Mottain, economist as SBB Securities. "Manufacturers may be holding back production because of war concerns," he added. Economists said Malaysia's industrial output is likely to drop further in the months ahead on worries about the global economic outlook and the prospect of war in Iraq. Department of Statistics data released on Saturday put January's industrial output index at 177.2, a 8.3 percent fall on December's revised figure of 193.3. The data is not adjusted for seasonal effects, which might distort month-to-month changes. It can be volatile. The rise in output was helped by a 7.0 percent year-on-year growth in the mining sector, the department said. Manufacturing, which accounts for more than two-thirds of industrial output, was flat while the electricity sector saw a 1.5 percent drop. The output numbers contrasted sharply with those posted by neighbor Singapore, where manufacturing production jumped 13.6 percent in January from a year earlier and 9.7 percent from December. A Reuters poll of economists released on Friday showed the market consensus forecast was for 9.2 percent growth in January from a year earlier and a 1.1 percent month-on-month contraction. MomentumLee Soo Kai, economist at OSK Research, said the outlook for for the first half of the year was uncertain. "We expect the momentum to slow down," Lee said. January trade data out this week showed a sickly 0.4 percent rise in imports versus December, a sign of slowdown in Malaysia's reprocessing of imported goods for re-export. Weaknesses in major export markets like Japan and the United States imply softening external demand for Malaysian goods. "There's more reason now for the government to come out with an economic stimulus package," said Mottain. Malaysia plans to unveil a fiscal stimulus package at the end of March to sustain economic growth in the face of slowing global demand amid worries over a possible U.S.-led military strike against Iraq. As an oil producer, Malaysia's economy will be less vulnerable than oil importing countries, but its exports, which account for just over 100 percent of gross domestic product, and tourism industry could suffer if war breaks out. In 2001, the government poured an additional 7.3 billion ringgit ($1.9 billion) into mainly infrastructure building to boost the economy after the September 11 attacks on the United States. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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