5pc-6pc Malaysia growth well on track

Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar
Aziz says should the global economy slow down significantly, it will
'not be as bad as previously' due to the strength of domestic demand.




The Malaysian economy is well on track to achieve five per cent to six
per cent growth this year, underpinned by robust domestic demand, with
investments playing a bigger role, says Bank Negara Malaysia governor
Tan Sri Dr Zeti Akhtar Aziz.

The central bank chief said should
the global economy slow down significantly, it will “not be as bad as
previously” due to the strength of domestic demand.

“Our growth
is on track because what is driving it is the domestic demand, and that
is very critical,” she said after handing out the 2013 Kijang Emas
Scholarship awards to three top achievers in the 2012 SPM examination
here yesterday.

Last month, Bank Negara revised its growth
outlook for the national economy to 5.0-6.0 per cent, higher than the
4.5-5.5 per cent projected by the Treasury at the release of the fiscal
budget in September last year.

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Zeti pointed out that consumption has also been growing steadily by six per cent to seven per cent.

“The economy is very strong and investments are taking place... they have already started and will take a few years,” she said.

On
the impact of Bank of Japan’s recent aggressive easing and the slump in
China’s first-quarter gross domestic product, Zeti said Bank Negara’s
growth outlook has factored in these two developments, although any
further deterioration in the Chinese economy can still affect Malaysia.

While there are a lot of challenges globally, it is important to stay focused on the economy and keep going, she added.

On the ringgit’s recent appreciation, Zeti said it was due to the weakening of other currencies.

“We have received inflows... this is not unusual, we have seen all this before.”

The local currency climbed to its highest level in two months in early April, in the runup to the 13th General Election.

Zeti
added that what is important is Malaysia's foreign exchange market has
been orderly and the financial system is in a better position to manage
the inflows compared to 10 to 12 years ago.

"The financial
system - the banking system in particular and the bond and capital
markets in general - has been able to intermediate these inflows in an
orderly manner."

Also, with the liberalisation of the rules
for foreign exchange transactions, corporations have the flexibility to
better manage these exposures and they have done well.

On the issue of national debt, Zeti stressed on the importance of fiscal sustainability.

"From what we have observed in Europe, the United States, Britain and
Japan, fiscal sustainability is very important and needs to be
accompanied by an increase in revenue.

"It needs to be
targeted to those areas that have the highest impact. It needs to ensure
that all are going to benefit from the fiscal policies."

As
to the monetary policy, Zeti said Bank Negara is keeping the
macro-economic environment in a sound position so that Malaysia does not
face inflationary pressures.

The three recipients of the
Kijang Emas Scholarship awards yesterday were Muhammad Aiman Sabeh Mohd
Shahib from Putrajaya, Asha Nair Unnikrishnan (Segamat, Johor) and Wan
Hashedah Wan Haron (Kemaman, Terengganu).