Malaysia expects economic growth even if war breaks out

Malaysia expects economic growth even if war breaks out

Associated Press
Kuala Lumpur

Malaysia posted strong trade figures Tuesday and the central
bank chief predicted that economy would still grow strongly even
if a war breaks out between the United States and Iraq.

Imports and exports rose strongly in August, bringing a trade
surplus of 4.57 billion ringgit (US$1.2 billion) compared to 4.05
billion ringgit ($1.06 billion) in July, preliminary data
released by the trade ministry showed.

Zeti Akhtar Aziz, governor of the central bank, told Dow Jones
Newswires in an interview in Washington that second-half growth
in gross domestic product would exceed the annual rate of 3.8
percent in the second quarter.

"The second half of this year should be better than the first
half and I expect the growth rate to be at least 4 percent for
the whole year," said Zeti, who was attending the annual IMF-
World Bank meeting.

Malaysia's robust economy and steady growth in neighboring
Asian countries made Zeti relatively sanguine about potential
adverse impacts stemming from any full-scale U.S. attack against
Iraq.

Since Malaysia is a net exporter of oil, a rise in oil prices,
which many expect would be the immediate impact of a U.S.-Iraqi
war, wouldn't affect the country, Zeti said.

The war would be a drag on the global economy as a whole, she
agreed.

But Malaysia's and its neighboring Asian countries' high
degree of reliance on each other for economic growth have given
the region "a higher degree of resilience" and made it "better
insulated," Zeti said.

The government recently revised its growth forecast higher,
from 3.5 percent to between 4 percent and 5 percent. In its world
economic outlook released last week, the International Monetary
Fund forecast 3.5 percent growth in Malaysia this year.

Zeti said that the bank had the "flexibility" to ease monetary
policy if economic impact from the war proved unexpectedly large.
The central bank has kept its key interest rate at 5 percent
since its last cut, after the Sept. 11 terror attacks.