Malaysia may need $2.5b extra boost

Malaysia's government may need to spend an additional 8-9 billion Malaysian ringgit ($2.2-2.5 billion) next year if economic recovery remains weak, a leading economic think tank said on Thursday.

The Malaysian Institute of Economic Research (MIER) slashed its gross domestic product forecast for the Southeast Asian country to minus 4.2 percent from minus 2.2 percent for 2009, citing fragile business and consumer confidence.

"If the recovery is weak and tepid, the Government will have no choice but to introduce another stimulus package of 8-9 billion ringgit next year," said MIER's executive director Mohamed Ariff. The budget deficit could reach 9-10 percent in 2010 with the extra spending, he said. The Government has already announced a two-year economic boost comprising extra spending and loan guarantees worth 67 billion ringgit that will bring its fiscal deficit to 7.6 percent this year. Of the total, only 2.7 billion ringgit have been actually spent as of June 5, Prime Minister Najib Razak said in a written reply to a question in parliament last month. KUALA LUMPUR, Reuters