Economy to grow 5.6pc this year,says MIER

LEADING think tank Malaysian Institute of Economic Research(MIER) maintained its 5.6 per cent growth forecast for Malaysia's economy this year.

Inflation is projected to rise to 2.5 per cent while the ringgit is expected to trade between RM2.95 and RM3 to the US dollar.

MIER executive director Dr Zakariah Abdul Rashid said this year's gross domestic product (GDP) growth will be driven primarily by domestic activities.

Zakariah said the country's economic growth is faster than the global growth, which is projected at 3.3 per cent in 2012, and 3.6 per cent this year.
"The Malaysian economy is growing faster than the world economy as it is located at the world's most dynamic region and we are also riding on the advantage of Asean as the region that will be driving global growth," he said.

Zakariah, speaking to newsmen at a briefing on Economic Outlook and fourth quarter 2012 survey results here yesterday, said the increase in this year's inflation will be fuelled by the increased inflow of capital into the manufacturing sector.

Although the 2.5 per cent forecast rate is a bit higher, he said it is still at a comfortable level as it is the rate that facilitates growth. The Consumer Price Index - which measures inflation - for November last year stood at 1.3 per cent, the lowest among neighbouring countries in the region.

On the Overnight Policy Rate, MIER expects Bank Negara Malaysia to keep it at the current rate of 3.0 per cent, at least until the first half of this year.

Going forward, the think tank projected the GDP for 2014 to be between 5.0 and 6.0 per cent, while inflation to stay at 2.5 per cent.

The economic growth is expected to be driven by domestic investment, given the on-going implementation of the government's Economic Transformation Programme (ETP), better export data and continuing negative developments overseas.

"Private consumption will remain healthy while private investment will be boosted by the implementation of projects under the ETP," Zakariah said.

By Cheryl Yvonne Achu