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Govt to unveil new growth forecast at budget-report


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August 3, 2008

Malaysia: Govt to unveil new growth forecast at budget-report
Malaysia will register positive economic growth this year and it will be reflected in the forecast due to be unveiled during the tabling of the 2009 budget this month, Reuters quoted the state news agency Bernama as saying Saturday.

Bernama, quoting Second Finance Minister Nor Mohamed Yakcop, said the Southeast Asian nation will not undergo a recession for the next two years despite the global slowdown as it was well diversified.

"We will announce the new growth target (for this year) officially on August 29 in the presentation of the Budget 2009," Nor Mohamed said. "Growth will be positive and significantly so."

The government has said that economic growth for 2008 will be closer to 5 percent, compared with its earlier forecast range of 5-6 percent due to a possible dip in consumption. Growth was 6.3 percent last year.

Inflation, at a 27-year high of 7.7 percent in June when the government cut petrol subsidies, could hover between 6 and 7 percent in July and possibly August before tapering off, Nor Mohamed said.

"This inflation we're having is a one-off inflation and it is a cost-push inflation, not demand-pull. So these are one-off. And for next year, the numbers won't be repeated," he said, adding that 2008 inflation should not go beyond 6 percent.

Nor Mohamed's comments come after Prime Minister Abdullah Ahmad Badawi announced plans to implement a new petrol price formula from Sept. 1 and said he would put a cap on prices of 2.70 ringgit a litre and cut prices in line with falling crude oil prices.

The country's target to cut the budget deficit to 3.1 percent may be difficult to achieve due to still-high global oil prices, rising government expenditure and soaring costs of infrastructure projects, Nor Mohamed said.

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