Malaysia is poised to grow at 5.3 per cent this year even as the economic picture for Japan following the recent earthquake remains less clear, says MIDF Research today.

Although it is premature to sum-up the total disaster, MIDF said it believes that any impact on Malaysia would be no more than a 'blip'.

MIDF said the Japanese government is expected to announce an additional budget that could exceed the 3.0 trillion yen for the Kobe earthquake by tapping into the special reserves of 203.8 billion yen in the FY2010 budget for the near-term reconstruction work.

The Japanese economy is also expected to rebound in the second half of this year as a result of the reconstruction work, which will likely commence then.

'Malaysia is poised to benefit from exports when the reconstruction work commences and this will augur well for the timber sector in particular,' the research house said.

During the Kobe earthquake, MIDF said Malaysia's exports to Japan surged 31.6 per cent year-on-year in 1995 and 3.5 per cent year-on-year in 1996, which is much higher than the total exports growth of 20.2 per cent in 1995 and -1.2 per cent in 1996.

'We expect Malaysia's exports to improve when the reconstruction work starts. Hence, at this stage, we have decided to reiterate our GDP forecast of 5.3 per cent and the policy rate to increase by 50 basis points to 3.25 per cent by year-end,' it added. -- Bernama