Forecast lowered

Press, 26 November 1987, Page 32

Forecast lowered

NZPA-Reuter Kuala Lumpur Malaysia's leading research institute has lowered sharply its 1988 growth forecast because of the world stock market plunge and its possible effects on the industrialised West The Malaysian Institute of Economic Research said on Monday real gross domestic product — the total output for goods and services — would grow 2.7 per cent next year, 1.2 per cent down on the 3.9 per cent it forecast in June. "Regardless of the real causes of the global equity market collapse, the crash will certainly emit a contractionary impulse,” it said in a report presented at its annual seminar on Malaysia’s growth prospects. “The most obvious impacts are the destruction of personal wealth which will re-

duce consumer spending and the drop in equity prices which will increase the cost of funds to corporations, thus deterring investments.” Malaysia’s economic prospects have improved considerably this year because of higher commodity prices. The former British colony is the world’s biggest producer of rubber, tin and palmoil. In projections made before share prices plummeted, the Government forecast that real gross domestic product would grow two per cent this year