The Malaysian Institute of Economic Research (MIER), projects the Malaysian economy to record a moderate growth of 5.2 per cent this year, driven by domestic demand.
The institute also projects the economy to have grown by 6.8 per cent in 2010.
MIER Executive Director Dr Zakariah Abdul Rashid said the implementation of the Economic Transformation Programme (ETP) and the 10th Malaysia Plan (10MP) projects will boost confidence in private consumption and investment.
On the ringgit, he said, the local unit will strengthen to 3.05 per US dollar this year, backed by larger capital inflows.
He also said that the overnight policy rate (OPR) is expected to be adjusted upward to 3.00 per cent, due to the pressure in prices.
Going forward, Zakariah said if the pressure in prices continued, the OPR will increase to 3.25 per cent.
He added that the inflation rate will stand at 2.8 per cent this year.