KUALA LUMPUR - MALAYSIA'S government needs at least 40 billion ringgit (S$16.7 billion) in increased spending to avert a recession, a research group said on Monday.
Deputy Prime Minister Najib Razak will introduce a 'mini-budget' in Parliament on March 10 to boost the economy, widely expected to be between 10 billion ringgit and 15 billion ringgit, AmResearch said in a report.
This comes after a 7 billion ringgit stimulus package unveiled in November.
Oh God!!! 7 Billion gone??
But AmResearch said the two stimulus packages may be insufficient to prevent the economy from slipping into negative growth this year.
The manufacturing slump is expected to continue until September, which will hit the export-driven economy, it said.
'While the increased public spending is in the right direction, we are of the view that more money should be injected into Malaysia's system, especially at a time when external demand is terminally ill and rising unemployment is impacting domestic demand,' it said.
'We are facing real threats of recession in the near-term,' it said. 'Malaysia needs at least 40 billion ringgit in total or 5 per cent of GDP, and measures should not only be aimed at low-income group but also middle-income groups.'
It said the United States is spending US$1.5 trillion or 11 percent of gross domestic product, China $586 billion or 16 percent of GDP and Singapore $13.8 billion or 10.7 percent of GDP.
AmResearch said the government should consider making 2008 a tax-free year to ease the people's burden and give cash or introduce a cash-bonus system for middle and low-income workers, families with school-going children, and farmers.
The government has slashed its 2009 growth forecast to 3.5 per cent, from 5 per cent but some economists have warned of a recession. -- AP
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