Malaysia’s central bank puts onus on growth

Following inflationary fears and the fact that Malaysia has experienced its slowest expansion across the last eight years, the Central Bank has revealed today that it will be shifting the onus onto increasing economic growth.

It is predicted that the economy of Malaysia will increase by no more than 4 percent for the period up to 2009, although the official 2008 forecast is 5.7 percent. Realistically it is looking closer to being between 5 percent and 5.5 percent for this year.

Governor Zeti Akhtar Aziz said in an interview in Washington yesterday that it is of paramount importance to the nation that the economy should not be allowed to falter despite the economic depression that is being faced in the rest of Asia.

The emerging markets have been hit by the credit crunch as exports have weakened as their largest customers, the US, Japan as well as the Euro zone have all faced a period of reduced growth.

The International Monetary Fund has revealed that in order to re-ignite growth in the emerging markets, an interest rate cut would be essential, although it is important to balance, assess and manage the risks of such action.

Kit Wei Zheng, a Singapore-based economist at Citigroup Inc, said that the interest rate cut may come next year rather than this year, although he indicated the difficulty of prediction given the current economic climate.

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