Malaysia's 2009 exports to shrink amid slowdown

KUALA LUMPUR, Malaysia - Malaysia's exports in 2009 are expected to decline for the first time in eight years as the global economic downturn hits the trade-dependent nation, officials said Wednesday.

Trade Minister Muhyiddin Yassin said exports are projected to grow 4.6 percent this year but likely to contract by 1.5 percent in 2009 given expectations for weaker demand from the U.S., Japan and Europe — Malaysia's key trading partners.

The government earlier targeted exports to grow 4.6 percent in 2009, but slashed its forecast after warning that the country's economy would likely grow 3.5 percent next year instead of 5.4 percent.

Muyhiddin said demand for electrical and electronics sector, which accounts for about 40 percent of Malaysia's exports, has softened in the U.S. and Europe but still see robust orders from Asia.

"While there is a softening in the market, demand has not been too adversely affected," he said.

"The (overall export) projection is not encouraging...but we hope that this will be a cushion in a dampening market," he added.

Over the January-September period, Malaysia's exports rose 16 percent to 512 billion ringgit ($146 billion). Last year, exports reached 605 billion ringgit ($172.8 billion).

The last time exports growth contracted was in 2001 when they shrank 6.8 percent.

Muhyiddin congratulated Democrat Barack Obama for his victory in the U.S. presidential elections but urged the new administration not to fall back on protectionist policies that would hurt free trade.

"There is an Obama-mania, there is high expectations of the new leadership in the U.S.," he said.

"The only concern at the moment...is whether America under Obama will adopt a pro-protectionist policy to try to safeguard its own domestic interest because they are facing the worst financial situation in 80 years," he said. "We would like to see a totally new America that takes interest not only in America but the whole world."

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