Member ID
User Password

Home  About Us  FREE Registration  Benefits  Contact Us  Partners  News  CRA Act

Latest Credit, Finance & Industry News
Zeti confident of 5pc-6pc economic growth this year [22-02-2011]  
    Email to friends.

Bank Negara Malaysia is confident the economy will expand between 5 and 6 per cent this year, after growing 7.2 per cent last year.

"We have a high degree of confidence that it will be in that range," central bank governor Tan Sri Dr Zeti Akhtar Aziz said after launching an Islamic bond index in Kuala Lumpur yesterday

The country's gross domestic product (GDP) grew 7.2 per cent last year, the highest since 2000. But the Finance Ministry's estimate for this year is between 5.5 per cent and 6 per cent, in line with a slower global economy.

Economists polled by Business Times anticipated growth to moderate to 5.3 per cent, with domestic demand continuing to drive the momentum. This will be supported by the implementation of projects under the 10th Malaysia Plan and the Economic Transformation Programme.

RAM Holdings anticipates a GDP growth of 5.6 per cent for 2011, while MIDF Research expects it to be 5.3 per cent.

On the ringgit, Zeti said the performance of the local currency unit reflects the country's economic fundamentals. As such, the ringgit has strengthened in line with Malaysia's strong fundamentals.

Last year, the ringgit posted one of its biggest gains against the US dollar in a year since it was de-pegged from the greenback in July 2005. By year-end, the local currency had gained nearly 10 per cent against the greenback.

Analysts project the ringgit to reach about RM3 to RM3.05 to the US dollar by end of this year, while some expect it to breach RM3 even before the end of the year.

At the close of trading yesterday, the ringgit ended lower against the greenback to 3.0340/0370 from Friday's close of 3.0335/ 0355.

Asked on the possible increase in the the statutory reserve requirement (SRR), Zeti said: "This is something we will make an assessment.... if the need arises, this is one of the instruments at our disposal among many others."

Last month, Bank Negara kept the Overnight Policy Rate (OPR) unchanged at 2.75 per cent but hinted that additional policy tools like the SRR and macro-prudential lending measures may be introduced to cushion the risks of macro-economic and financial imbalances.

Analysts expect the central bank to raise the SRR at its upcoming monetary policy meeting (MPC) on March 11 to curb excess liquidity in the banking system. The SRR, which is at 1 per cent now, is expected to be raised between 0.5 and 1 per cent.

MIDF Investment Bank economist Anthony Dass, who anticipates Bank Negara to increase the SRR to 2 per cent at its next MPC meeting, said a 1 per cent hike will absorb about US$1.3 billion (RM3.95 billion) from the banking system.

"We have placed a 30 per cent chance that Bank Negara will use the SRR as a means to limit the flow of liquidity as it will weigh on all possible options," he said. - By Hamisah Hamid

Brought by:

Site Map | Best viewed at 1024x768 resolution. | © Copyright BASIS CORPORATION SDN. BHD. (315708-X). | | Share
Customer Notice and Summary of Rights | Personal Data Protection Policy   18-03-2018 08:17 AM