ASEAN KEY DESTINATIONS
Malaysian growth rate on target
Malaysia's gross domestic product (GDP) growth projections this year, which has been estimated in the range of 5 percent to 6 percent by policymakers at Bank Negara, is considered reasonable considering the challenging external front.
However, economists told media that optimism would be tinged with caution due to the volatile and changing dynamics of the global economic environment.
They cited the geopolitical problems in oil-producing regions of the Middle East and North Africa, the still unresolved euro debt crisis and the still unknown impact from the earthquake and tsunami in Japan as factors that would make decision-making difficult in the coming months.
"I think we should take note of the challenges that are being faced by policymakers in the current environment and that's why I think the growth projections are reasonable," AmResearch Sdn Bhd senior economist Manokaran Mottain said. Last year, the country's economy expanded by 7.2 percent.
Meanwhile, Kenanga Investment Bank Bhd economist Wan Suhaimie Saidi said the estimate was "fair", given the uncertainties on the external front.
"The central bank has indicated before that the complexities of fund flows, combined with high commodity prices, will definitely be a concern in managing monetary policy," he said.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz noted in a statement following the release of the central bank's Annual Report 2010 and Financial Stability and Payment Systems Report 2010 that there remained risks to the growth projection.
These included sharper-than-expected deterioration in external conditions, significant volatility in capital flows given the continued uncertainty in international markets, and higher-than-anticipated inflation emanating from supply-driven factors, she said.
Manokaran said the 5 percent to 6 percent range was comfortable "because nobody knows how far external factors like high oil prices will go, as nobody knows how long the troubles in the Middle East will last".
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