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Malaysia's 6pc growth highly likely [24-03-2011]  
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HE local economy can grow 6 per cent this year, the higher end of the official forecast, if all public and private sector projects go ahead without any external "destabilising" events, said Bank Negara Malaysia (BNM) Governor Tan Sri Dr Zeti Akhtar Aziz.

"We have high potential of achieving the 6 per cent growth during the course of the year ... we have the foundations to do that," Zeti said, adding that better growth is expected in the second half of the year.

She stressed that the economy is growing steadily as Malaysia has the fundamentals and flexibility to go into new areas of growth in the manufacturing and services sectors.

The central bank also does not expect the economy to be significantly affected by the earthquake and tsunami disaster in Japan, as the Malaysian economy was powered by domestic demand.

Japan is Malaysia's third biggest export market last year.

"Key to this is continued consumption demand and also continued growth momentum in investment activities in the private sector. We have the enabling environment and the Economic Transformation Programme," Zeti said when releasing details of BNM's annual report in Kuala Lumpur yesterday.

Inflation is forecast to average between 2.5 and 3.5 per cent this year, a situation that is manageable.

"Much of the increase is due to the two components (food and fuel) at this point in time, not a concern but we will monitor closely, whether higher commodity or energy (prices) is of a temporary nature or more permanent," she added.

Malaysia can also handle the rise in crude oil prices if they stayed within the range of the US$100 (RM303) per barrel. This means the government can afford to cut subsidies gradually, without shocking consumers with bigger cuts.

"However, if it goes to US$150 (RM455) per barrel and stays at that level for a sustained period of time, it would affect global growth and net oil importers.

Earlier, Zeti said all sectors are expected to expand in 2011, supported mainly by the continued growth of domestic demand.

The services and manufacturing sectors are expected to grow at a more moderate pace while trade-related services and export-oriented manufacturing industries will record slower growth in line with the moderation in external demand.

Growth in the agriculture and mining sectors is projected to strengthen, benefiting from better crop production amid high commodity prices and higher output of natural gas following the opening of two gas fields.

Zeti said foreign direct investment (FDI) inflows are due to rise with the economic outlook, better corporate earnings, rising business confidence, improvements in global FDI flows and the government's wide-ranging economic transformation.

On the financial sector, Zeti said the focus will be on the implementation of a new financial sector blueprint in June which will enhance the capacity and capability of the Malaysian financial sector to serve the needs of a high-valued added and high-income economy.
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