Malaysia cuts 2012 growth to 4-5 %

22.03.2012

Malaysia’s central bank Wednesday cut its economic growth forecast for 2012 as the debt crisis in Europe saps its appetite for Asia’s exports.

The bank expects Malaysia’s economy to grow between 4 and 5 percent this year. It previously forecast growth of 5 percent to 6 percent. Malaysia’s economy cooled to 5.1 percent growth last year, from 7.2 percent in 2010.

Bank Negara Malaysia Gov. Zeti Akhtar Aziz said export growth will likely slide to 3.2 percent from 8.7 percent in 2011 amid weaker demand from Europe for electronics and other goods.

Bank Negara, in its annual report, said the whole of Asia is feeling the brunt of the crisis in the European Union, which takes nearly a quarter of the region’s exports.

It said stimulus efforts in the Philippines, Indonesia and South Korea as well as disaster reconstruction spending in Thailand and Japan are expected to cushion some of the impact of the slowdown.

Bank Negara said Malaysia’s key interest rate, which has been steady at three percent since last May, was supportive of economic activity.

But it said it has the “flexibility” to respond to a sharper downturn in the global economy — indicating a possibility of rate cuts to boost growth if needed.

Inflation is expected to fall further, to between 2.5 and 3 percent, from 3.2 percent last year, the bank said.