DOMESTIC DEMAND SHOWING CLEAR SIGNS OF RECOVERY, SAYS CENTRAL BANK GOVERNOR

KUALA LUMPUR, Sept 24 (Bernama) -- Malaysia's domestic demand is showing clear
signs of recovery prompted by the fiscal stimulus and an accommodative monetary
policy, Central Bank of Malaysia Governor, Dr Zeti Akhtar Aziz said
here Thursday.

" We have seen the worst and there is now across the board improvement but
the external sector has to show a more significant improvement in terms of
external demand.

" But there are clear signs of recovery in domestic demand which has
benefited from the fiscal stimulus and the accommodative monetary policy," she
said.

Zeti was speaking to reporters after delivering a keynote address at the
South East Asian Central Banks-Bank Negara Malaysia Banking and Financial Law
School 2009.

Asked if Malaysia is experiencing a W shape recovery, Zeti said the country
did
not experience any credit crunch as financial institutions remained strong and
continued to provide financing for domestic businesses.

While saying that Malaysia did not face any financial crisis, Zeti added
that only countries with over leverage needed to reduce their indebtness.

" Only if they restructure their financial system would they be able to see
any sign of increase in consumption activity.

" There could infact be a second round of impact on their financial system
given the economic slowdown but in Malaysia's case, we never had that situation
to begin with as our banks are financially very solid," she said.

Asked if interest rates will be revised, the governor said it was at an
appropriate level now and would remain so unless there were any significant
change.

Zeti added the business environment now was dynamic and, going forward, is
expected to improve significantly next year.

" The economy is likely to continue improving but in the initial stage we
expect growth to be modest. Growth will be more significant next year," Zeti
said.

Prime Minister Najib Tun Razak will unveil Budget 2010 in
Parliament on Oct 23, 2009 and he is expected to announce the revised forecast
Gross Domestic Product (GDP) growth for this year and 2010.

On Asian Development Bank's forecast of a 3.1 per cent contraction for the
Malaysian economy, Zeti is confident the country would see positive growth in
the fourth quarter as external demand is likely to improve in the third quarter.

" For this year, our assessment is we are seeing positive growth after the
collapse in external demand and in world trade," she added.

--BERNAMA