Malaysia GDP growth forecast likely to be raised

MALAYSIA is likely to revise upwards its economic growth forecast for this year at the upcoming national budget, Bank Negara Malaysia governor Tan Sri Zeti Akhtar Aziz said.

"We expect that it would be an improved outcome compared with the earlier projection," she told reporters on the sidelines of the Forbes Global CEO conference in Kuala Lumpur yesterday.

The government's current projection is for an economic contraction of between 4 per cent and 5 per cent.

"Fiscal stimulus and aggressive financing are two critical elements supporting the recovery that we are seeing," she said, adding that she is confident that economic growth would turn positive in the fourth quarter.

The country's gross domestic product contracted at a slower pace of 3.9 per cent in the second quarter of this year compared with a 6.2 per cent contraction in the first quarter.

Meanwhile, inflation is also seen improving, and is likely to come in at between 1 per cent and 2 per cent later in the year, Zeti said.

Malaysia's current interest rate level is supportive of growth, she added.

"We're not a central bank that adopts an inflation-targetting framework. We had predicted that inflation would decline during the course of this year and we have been validated. Temporarily it (inflation) is negative ... and we expect, going later into this year, that inflation will be in the region of 1 per cent to 2 per cent," she said.