Jobless rate may hit 4.5pc in 2009: MIER

THE unemployment rate next year may rise to 4.5 per cent compared to about 3.5 per cent this year amid the global economic downturn, according to the Malaysian Institute of Economic Research (MIER).

Executive director Professor Emeritus Dr Mohamed Ariff Abdul Kareem said in the third quarter this year, the number of jobless Malaysians stood at 12,000.

“The unemployment number is growing. We have to watch it very closely,” he said in a keynote speech at a dialogue with Professor Robert Engle, who won the Nobel Prize for economics in 2003.

Mohamed Ariff said a 4.5 per cent rate is considered high by Malaysian standard.

“It is high because we are used to 2.2 and 2.5 per cent but if compared to Europe, Japan and North America, 4.5 per cent is very low,” he said.

Mohamed Ariff said the manufacturing industry is expected to be the most highly affected by the economic downturn.

“We think that the electrical and electronic sector in particular is very vulnerable,” he said.

“The main support for the economy will probably come from the services sector. It will be the engine of growth, helping us to avoid the real recession next year,” he added.

According to Mohamed Ariff, Malaysia has a 40 per cent chance of falling into a technical recession next year and 30 per cent chance of going into a real recession.

“But this is below 50 per cent. It now depends on what the government does,” he said, adding that more measures should be taken to get through the current financial crisis.

At the dialogue, Engle said Malaysia may face a hard time like other economies in Asia.

“We hope that China will be able to stay up. If China struggles, I think the rest of the Asian economy will have a hard time as well,” he said. — Bernama