WASHINGTON: Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said the economy is on track for 4.5 to five per cent expansion this year as exports increase and is poised for higher growth in 2014, while the main risk is from issues outside the country.
"We saw the latest numbers for exports have turned around to become positive so if that trend continues it will be at the higher end of the central bank's forecast in August for 4.5 to five per cent growth," Zeti said in an interview, here, yesterday.
She said she expects economic growth next year "will be an improvement from 2013".
Malaysia, Southeast Asia's third-largest economy, has posted an average six per cent growth in the three years through 2012, aided by domestic demand and investment. The country now joins Asian emerging markets such as Indonesia in confronting slower growth, undermining the region's role as the main driver of global expansion.
"The domestic sector has been solid and has been the anchor to drive our growth during this more challenging period," she said.
In 2013, "global trade slowed down significantly, and of course, that affected us because of the openness of our economy. But had we not rebalanced our economy, we will have had one to two per cent growth".
Malaysia cut its forecast for growth this year to a range of 4.5 to five per cent in August, from six per cent previously.
Zeti said over the next six months to a year, she is focused "mostly on growth" rather than inflation, because "global growth will remain subdued".
Inflation is stable, she said, as "demand is on a steady growth path and we have significant expansion of capacity".
Consumer prices rose 1.9 per cent in August from a year earlier. Banks have raised their inflation forecasts for this year and next to reflect higher fuel costs.
Zeti said the US Federal Reserve slowing the pace of its US$85 billion (RM272 billion) a month in asset purchases will be positive if it's based on strength in the world's largest economy and better communication by American policymakers will reduce volatility in financial markets when it happens.
Tapering the bond buying amid an "economic recovery that is accompanied by job creation" will be "a positive development for the rest of the world," Zeti said. Bloomberg