The outturn for the year as a whole is now expected to be in the range of 5 - 6%. There is also greater optimism now that the prospects for this growth momentum will be sustained in 2006. Of significance is the continued strength of private sector activity. Household consumption increased by 10.4%, while real gross fixed capital formation increased by 9.6% in the third quarter. Reflecting Malaysia's structural transformation toward a skilled- and knowledge-based economy, the services sector has become increasingly important, now accounting for 58% of GDP, compared to only 47% in 1990. Indeed, more than 50% of the growth in the third quarter emanated from the services sector. Growth has remained strong in both the traditional services sub-sectors as well as in new growth areas such as shared services and the information and communication technology industry. This structural transformation of the economy has also been reflected in the pattern and the quality of foreign direct investment, with a shift away from capital- and labour-intensive projects towards the higher value added, skills and knowledge-intensive services industries. In the manufacturing sector, the electronics industry is expected to benefit from the uptrend in the global electronics cycle, while commodity prices are forecast to remain high, supporting export growth as well as private consumption. Sustained demand for new uses for palm oil, in particular for bio-diesel production is a positive development. Private investment is expected to also increase substantially in 2006, driven by high levels of capacity utilization and strong revenue and earnings growth.

Yet the risk of further market correction remains high. 6. The global economy remains highly vulnerable and we cannot fully assess the extent of the crisis yet, due to three factors: uncertainty over the dynamics of the pandemic; high spillovers on several fronts, and weakened international and domestic institutions. 7. The Covid-19 poses major challenges to emerging-market economies (EME). The spread of the disease finds them with worse living conditions and less resources. EMEs remain heavily exposed to spillovers due to dependence on capital inflows, commodities and remittances. Economic informality, limited social safety nets, and shallow financial markets limit the effectiveness of shock absorbers and policy responses. 8. Yet not all EMEs are the same. Some face this crisis with stronger fundamentals, broader policy space and more credible and effective institutions. 9. Chile has been hit hard by the pandemic. The first cases emerged in early-March and contagion seemed to stabilize by end April, only to rapidly escalate over the last month and a half. The country is now in its 15th week of the pandemic, with 250.000 confirmed cases and active cases stabilizing again. While Chile currently stands 8th in number of cases in the world, mortality rates remain low and testing broad, thanks to its stronger health system compared with other EMEs. 10. The spread of contagion has led authorities to adjust their NPC strategies. This has included stricter and broader quarantines, which have grown from 20% of the population in April to 49% these days.