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MIER Maintains 5.2 Per Cent GDP Growth Forecast For 2011 [15-04-2011]  
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The Malaysian Institute of Economic Research (MIER) is maintaining its projection of a moderate 5.2 per cent growth on the country's gross domestic product (GDP) from last year's 7.2 per cent, and expects the growth to improve to 5.5 per cent next year.

MIER executive director Dr Zakariah Abdul Rashid said this year's GDP would be weighed down by structural impediments in net exports despite strong domestic demand due to supportive government policy measures.

"Underperformance in net exports will drag down economic growth in 2011," he said at the institute's economic briefing here Thursday.

He said the growth rate would start to gain momentum in the second half of this year and onwards, bolstered by the implementation of the Economic Transformation Programme projects, pushing the GDP growth further to 5.5 per cent in 2012.

For domestic consumption, he said, the Consumer Price Index (CPI), an indicator of price variation on domestic products and services, was forecast at 3.2 per cent this year after hitting 2.9 per cent in February due to the increase of global oil and food prices.

With GDP growth within its potential level of 5.0-6.0 per cent, coupled with manageable CPI of 3.2 per cent, Bank Negara Malaysia was expected to lift the Overnight Policy Rate (OPR) by 50 basis point to 3.25 per cent from 2.75 per cent currently to curb inflation, he said.

He added that as the economy gathered momentum in 2012, CPI was predicted to edge higher to 3.3 per cent, prompting a further hike in OPR by 25 basis point to 3.5 per cent.

For the ringgit, he said, the local currency was expected to hit 3.05 against a US dollar this year on larger capital inflows and strengthen further to an average of 2.95 next year as the macroeconomic fundamentals improved.

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