MALAYSIA CAN ACHIEVE 5-6 PCT GROWTH THIS YEAR, SAYS ECONOMIST

By Mohd Iswandi Kasan Anuar
KUALA LUMPUR, June 2 (Bernama) -- Malaysia can achieve between 5.0 and 6.0
per cent economic growth this year, backed by domestic demand and despite the
slow global economic recovery amid higher commodity prices, says an economist.

Centennial Asia Advisors, Chief Executive Officer, Manu Bhaskaran said
domestic demand was set to remain firm on account of the strong investment
partly driven by the government's Economic Transformation Programme.

"High prices for oil, palm oil and rubber will also help," he told Bernama
in an interview here.

Bhaskaran, a leading Asian economist based in Singapore, said the Asian
economy may experience a slowdown during the second half year on the back of
higher oil price and the need of greater fiscal therapy.

He said external demand would slow in the second half of the year as major
economies were experiencing relatively strong growth in the early part of this
year.

"Many countries are moving to reduce fiscal deficit aggressively to soften
the level of demand in the economy, that would impact growth and employment," he
said.

This scenario could be seen in all major countries, especially the Group of
3 (G3) nations comprising the United States, Japan and the economies of the
euro-zone, Bhaskaran said.

"Overall, we can see a decline in demand, a build-up of the global inflation
pressures and since all economies in this part of the world are open economies,
we are bound to take some imported inflation pressure," he said.

He said the situation might get worse and affect economic growth as most
Asian countries were export-dependent economies, while the central banks will
tighten monetary policy to control inflation.

Bhaskaran also said that China's economy was overheating and would have
to cool down, otherwise it would be very damaging in the long term.

As a result, monetary tightening via rate increases and other administrative
measures will help to slow the Chinese economy from excessively high growth to a
more sustainable and healthy pace.

However, China would still grow strongly despite that, and as such Asean's
exports to China will remain on track, he said.

Luckily for Malaysia, it would have good positive structural factors to push
growth, Bhaskaran said.

The ETP projects will bring significant investment, while higher commodity
prices will continue to support rural income and keep demand high, he said.

On the impact of Japan's economy following the triple disasters it suffered
in March, Bhaskaran said the rest of Asia including Malaysia should not be
unduly negative.

"Asian economies have diversified their export, investment, tourism and
other economic linkages away from Japan during the last 20 years of a stagnant
Japanese economy. The impact on Asia will be relatively small," he said.

He believed that by the year-end, power supplies will have been largely
restored and consumer confidence recovered.

"By then, we should see considerable reconstruction activity kicking in.
Overall, economic growth for the year will see a small contraction but a rebound
in 2012," Bhaskaran said.