M'SIA TO TAKE EXTRA MEASURES IF GLOBAL ECONOMY WORSENS

KUALA LUMPUR, March 26 (Bernama) -- Malaysia has the capacity to take
additional measures if the global economy worsens and financial conditions fail
to stabilise after the second half of the year, Malaysia's Central Bank Governor
Dr Zeti Akhtar Aziz said.

"Most of the measures are already in place and we have further measures that
we can undertake in promoting growth in new areas as well as entering into
arrangements with other countries where we can mutually benefit," she said.

These also include monetary measures.

"We have implemented stimulus measures (and) we believe, we have every
opportunity to resume growth. However, if in three months we see these
conditions not stabilised, then we have to review the situation.

"So, in this case, we will give out a new set of forecast. And you would
have seen just about every agency and several countries have continued to revise
their forecast," she said.

The central bank has forecast growth this year between 0.1 percent and
one percent and unemployment to increase to 4.5 percent from 3.7 percent last
year.

On whether the country was technically already in a recession, she said a
technical recession meant two quarters of consecutive negative growth and that
the media should not overreact or over focus on it as would be a disservice to
the country.

"What you (media) need to look at is the fundamental cause of it and what
are the prospects of getting out of it and what we are going to do to mitigate
it."

Dr Zeti said a negative growth in the first quarter, if it happens, will be
well within expectation.

While growth was 7.1 percent in the first quarter of 2008, comparatively the
first quarter of this year had been generally weak and on top of that, exports
were sharply affected in January and so, all these numbers will produce negative
growth, the governor added.

On deflation, she said the country would not face deflation and inflation
would likely be in the region of 1.5 to two percent.

On whether Malaysia's Central Bank is considering buying more government
bonds from primary options or secondary market to bring down bonds yields, Dr
Zeti said the central bank will not assume that role and does not anticipate
doing so.

When asked on Malaysia's reaction to the United States Federal Reserve plan
to buy up to US$300 billion in treasury securities, she said: "This is sort of
uncharted territory, we have to monitor it closely to see what the implications
are on the financial markets."

She said in Malaysia's 50 years of central banking it has not resorted to
this kind of measure but understands there is a need for the United States to
undertake the measure and believes that the United States is aware of the
implications.
-- BERNAMA