KUALA LUMPUR: Malaysia is expected to achieve full-year gross domestic product (GDP) growth of at least five per cent or better in line with positive economic performance in the first three quarters of2012, said Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz.
She said the GDP in the first three quarters of the year was better than expected.
Speaking to reporters after announcing the third quarter (Q3) GDP performance, she said the fourth quarter is likely to continue the momentum achieved in the third quarter despite uncertainties in the export sector on the back of weak developments in the developed world.
"We are not insulated, but the anchor to our growth is from domestic demand and we expect this will continue to be strong," she said.
Malaysia targets a GDP growth of four to five per cent this year.
The economy expanded by 5.2 per cent in the third quarter of 2012 compared with 5.8 per cent in the same quarter a year earlier amid the challenging global economic conditions.
The overnight policy rate (OPR) was left at three per cent during the third quarter.
Zeti said the central bank does not only rely on interest rates to manage the country's microeconomic condition.
"We rely on a wide range of instruments that include micro-credentials measure for example to prevent the build-up of financial imbalances in our economy.
"We also create special funds if there was a slowdown in targeted sectors that are affected like small and medium skill enterprises," she said.
Going forward, Bank Negara envisages investment to remain strong in the face of improvements seen in the investment climate while domestic demand and trade with the Asean region continue to strengthen, Zeti said.
She said private-driven investment will remain strong, supported by foreign direct investments.
"There is tremendous interest from different parts of the world. The government initiative under the Economic Transformation Programme will continue.
"There were delays in 2011 but we have seen this project commence, and it will continue to be implemented over the next few quarters," she said.
Commenting on China's leadership transition, Zeti said she expects business ties between China and Malaysia to remain strong.
"We have seen a rise in trade being settled in Renminbi and also seen funds being raised in our bond market in Renminbi," she said.
China is Malaysia's largest trading partner. President Hu Jintao has stepped down as ruling party leader of the Communist Party of China to clear the way for Vice-President Xi Jinping.
On the US fiscal cliff, Zeti said: "I've quick confidence that they will come to a solution to address it."
The fiscal cliff refers to a combination of spending cuts and tax increases mandated to take effect in January 2013 if US lawmakers cannot bridge their differences on how best to reduce the nation's budget deficit and debt. -- BERNAMA
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2012-11-19 09:14