M'SIA'S ECONOMY TO GROW AT 5-6 PCT THIS YEAR - CENTRAL BANK

KUALA LUMPUR, March 23 (Bernama) -- The Malaysian economy is projected to
grow at five per cent to six per cent this year, supported mainly by continued
expansion in domestic demand, says Bank Negara Malaysia (BNM).

The growth projection between five per cent and six per cent was based on
the moderate growth expectation in advanced economies and a return to more
normal growth rates by the Asian economies, the central bank said in its annual
report released Wednesday.

Not withstanding robust domestic demand, it said that a rapid deterioration
in external conditions could have significant adverse spill over effects on the
overall economy through investment and employment channels, while also
affecting overall sentiments.

While external demand was expected to moderate this year, growth
contribution of net exports would turn around to be positive, amid a larger
trade surplus on sustained commodity exports to the Asian region, it said.

The central bank said domestic demand was expected to maintain a strong
growth momentum driven mainly by a robust expansion in private sector activities
while private consumption would be supported by favourable labour market
conditions, higher disposable income and sustained consumer confidence.

The employment situation was anticipated to improve particularly with higher
job creation in the domestic-oriented manufacturing and services sectors.

It said the expectation for further increases in private sector salaries and
continued high commodity prices would raise household income.

In addition, access to credit would also provide support to household
spending this year, it said.

Bank Negara said this would be supported by capital spending by the
domestic-oriented industries given the high levels of capacity utilisation and
positive business confidence as well as the implementation of key initiatives
announced by the government under the Economic Transformation Programme.

Meanwhile, the public sector would remain supportive of growth with higher
capital spending projected in the second half of this year, said the central
bank.

It said this was attributable mainly to the implementation of new projects
and acceleration of ongoing projects to promote private sector activities.

All economic sectors are projected to expand firmly this year, aided mainly
by continued growth in domestic demand.

Bank Negara said the services and manufacturing sectors are expected to
expand albeit at a more moderate pace given the high statistical base of 2010.

The services sector would remain the largest contributor to growth, fuelled
by the domestic demand-oriented sub-sectors, particularly wholesale and retail
trade, finance and insurance and communications, it added.