KUALA LUMPUR, Feb 26 (Bernama) - Malaysians can now heave a sigh of relief with the economy on an upward path, having expanded by 4.5 per cent in the last quarter of last year after three consecutive contraction quarters.

Rather than celebrating, it will be wise for the people to exercise prudence, while increasing their industriousness amid external uncertainties for an economy that is invariably tied to regional and global economy.

In short, we are not out of the woods yet for economics is a dynamic phenomenon which from to time does not fail to spring surprises much to the chagrin of policymakers.

Nevertheless, it is noteworthy that all sectors -- manufacturing, services and construction, except mining, chalked up strong positive growth.

Undoubtedly, this is largely attributable to the spillover of the RM67 billion stimulus package under which 113,000 projects have been or are being implemented, bearing fruit indeed.

The construction sector seems to be an obvious recipient, being the highest growth sector, expanding by 9.2 per cent year-on-year compared with a 7.9 per cent growth in the third quarter.

Further evidence of the economy on the right path is the pick up in container movements at major ports, thousands of jobs are created in the manufacturing sector and listed entities reporting better corporate earnings.

The stock market saw greater interest with rising volume and the index hovering at 1,270-point level.

Figures released by the government showed exports have started to rise while more foreign firms are eyeing listing on the stock exchange.

Credit should go to the government in unveiling the two packages relatively quickly as pre-emptive measures to mitigate adverse effects of a global economy reeling from the onslaught of the U.S. credit crunch.

On the average, the government has pumped about RM1 billion per month into the market since January 2009, which is no easy feat.

Other factors are also raising sentiments and economic optimism.

Earlier this month, a Malaysia-Chinese joint venture aluminium smelting plant in Sarawak was formalised, involving an investment of US$1 billion, clearly reflecting the confidence of Asia's biggest economic power has in investing in a big way in Malaysia.

Saudi Arabia's institutional portfolio funds are also teaming with Malaysian parties to invest in the economy and third countries, which yet again gives a positive sign to the investment climate in Malaysia.

Hopefully, this will mark a further indicator in the country's path towards rapid and sustained economic recovery.

What was far-sighted was that the stimulus packages encompassed diverse economic and target groups, including workers, consumers, investors, small-and medium-sized businesses, exporters and unemployed graduates.

The government's measures were also designed to benefit the rural folk, again proving that while the government was focused to grow the economy, it never forgets the people's welfare.

After all, the people are a valuable resource in a nation's endeavour to redeem herself from recession and move forward without too many casualties.

For this year, growth is projected at more than five per cent -- higher than the four per cent projected earlier, thanks to the pro-active measures put in place by Prime Minister Datuk Seri Najib Tun Razak.

The prime minister's visits to key economies like China, India and the Middle East to woo much-needed investments are beginning to pay dividends, with investors from these countries now making inroads into the local economy.

However, the extent of Malaysia's recovery also depends on the health of regional and global economies as external economies will decide the demand for the country's exports and more so Malaysia is an export-driven nation.

Still, we are well placed to achieve an average six per cent growth a year and attain developed nation status by 2020.

But now the real challenge begins -- to maintain and boost growth.

The much-awaited and long-overdue New Economc Model (NEM) is expected to have the answer with bold measures that will ensure Malaysia makes the quantum leap to a high-income country.

Najib, who is also Finance Minister, is to unveil NEM end-march.

Hopefully, it comes with solutions to the never-ending subsidy issue and how the government plans to reduce the budget deficit, expected to shrink to 5.6 per cent this year from 7.4 per cent last year.

The economic model will incorporate ideas on improving the country's economic standards and propel Malaysia from a middle-income country into a high-income nation.

One thrust of the model is how to increase workers' productivity through their own efforts via innovation and creativity.

But more than the blueprint itself is the speed of execution of NEM is what will ensure the country's economy not only remains on the growth path but also is able to weather any kind of storm that awaits us.

The resilience of the domestic economy and healthy corporate and financial sectors plus the NEM will ensure Malaysia is well prepared to seize the opportunities when the global economy recovers.

-- BERNAMA, 26 February 2010 - A news analysis by M. Saraswathi