Malaysia may cut its economic growth forecast for the year as the outbreak of a deadly virus undermines consumer confidence and hurts tourism, Acting Prime Minister Abdullah Ahmad Badawi said.
A stimulus package to fuel economic growth is expected to be ready in two months, Abdullah told reporters. Last month, the central bank said it expects the economy to grow 4.5 percent this year, from 4.2 percent last year.
"Businesses are affected. Revenue, income are also affected. The need to reduce the cost of doing business is urgent," he said, after a meeting with business leaders. Lowering the forecast "may be unavoidable."
Malaysia, Southeast Asia's third largest economy, is poised to join neighbor Singapore in slashing its outlook for growth as severe acute respiratory disease, or SARS, empties airport lounges, hotels and malls. Tourism is the country's second-largest foreign exchange earner after manufactured goods and commodities.
Last week, the Malaysian Institute of Economic Research, a think tank, slashed its 2003 growth forecast for the economy by over a third to 3.7 percent because of the SARS outbreak and war in Iraq. Singapore has slashed its official growth forecast to between 0.5 percent and 2.5 percent this year, from between 2 percent and 5 percent earlier.
At the meeting with Abdullah, heads of Malaysian companies asked the government to consider lowering interest rates to cut borrowing costs. They also wanted the government to persuade banks to restructure their loans as slumping demand has made it difficult for them to service debt.
The government, which initially said it would announce its stimulus package in April, has delayed the announcement saying it needs more time to assess the impact of the war and the virus.
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