THE 2011 BUDGET SPEECH

World Economic Outlook

Mr. Speaker, 09. Following the recession, recovery of the world economy is gaining momentum in 2010. From a growth rate of minus 0.6% in 2009, the world economy is forecast to expand at 4.8% in 2010 before moderating to 4.2% in 2011. 10. The United States economy is expected to grow at 2.6% in 2010 and 2.3% in 2011. In the European Union Area, economic growth is forecast at 1.7% in 2010 and 1.5% in 2011. In the case of Japan, economic expansion is forecast at 2.8% in 2010 and 1.5% in 2011. 11. Due to subdued consumption and demand, economic recovery of the advanced economies remains weak in comparison with emerging

5 economies. As a whole, advanced economies are forecast to expand at 2.7% in 2010 and 2.2% in 2011, while emerging and developing economies are expected to grow faster at 7.1% in 2010 and 6.4% in 2011. China's economy is forecast to attain a growth rate of 10.5% in 2010 and 9.6% in 2011. India's economy is also forecast to grow at a high of 9.7% before moderating to 8.4% in 2011. As a group, the ASEAN-5 economies (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) are expected to expand at 6.6% in 2010 and 5.4% in 2011. National Economic Outlook Mr. Speaker. 12. In line with the global economic recovery, the Malaysian economy is expected to expand between 5% to 6%, supported by domestic demand as well as pro-growth strategies and measures introduced in the 2011 National Budget. Growth is expected to be broad-based, led by strong expansion in the manufacturing and services sectors in an environment of stable prices with inflation below 3.0%. 13. The manufacturing and services sectors are forecast to expand at 6.7% and 5.3% respectively in 2011. Domestic demand is forecast to increase by 5.8% in 2011, led by growth in private investment of 10.2%, and private expenditure of 7.0%. 14. Per capita income is forecast to increase 6.0% from RM26,355 in 2010 to RM27,950 in 2011, or in purchasing power parity terms, from USD14,102 to USD16,028. download