Malaysian economy to grow about 8%: NEAC

Malaysian economy to grow about 8%: NEAC

SINGAPORE (AFP): The Malaysian economy should grow 8.0 - 8.5 percent this year, a member of the Malaysian government's National Economic Action Council (NEAC) said on Thursday.

This was expected to fall to 7.5-8 percent in 2001, Zainal Aznam Yusof told the Nanyang Asia Pacific Central Banking Conference.

The government has forecast gross domestic product (GDP) would grow 5.8 percent this year, and most economists have predicted growth this year would exceed the official projection.

Malaysia's export growth next year was expected to moderate with trade and current account surpluses falling, added Zainal, who is also the deputy director-general of the Institute of Strategic and International Studies in Malaysia.

"Private consumption and investment could take some of the slack in external demand," he said.

He said monetary policy should focus on "holding the economy" on the growth path, adding there was no necessity for any sharp tightening or loosening of monetary policy.

Inflation would hover between 1.5 - 2.0 percent in 2000 and was unlikely to surge past three percent next year.

Zainal said the higher growth anticipated for 2000 and 2001 would lead to higher government revenue and the earlier revenue forecast of 5.7 percent growth could be exceeded.

It was probable that the 2001 budget could see either a smaller deficit or even a small surplus.

"With growth still expected to be robust, there are no extraordinary reasons to adopt a strong dose of fiscal stimulus package for Budget 2001," he said.

He added the ringgit would remain pegged at a rate of 3.80 to the US dollar.

Zainal also said Malaysia should review its 10 percent exit tax on profits repatriated by foreigners.

The government should consider lowering or removing the tax with the economy staging a strong recovery, he said.