MIER revises 2011 growth forecast to 4.6pc

MIER says although there was growth in the third quarter, the economy would be impacted by slowing activities in sectors like manufacturing.

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Kuala Lumpur: The Malaysian Institute of Economic Research (MIER) has cut its 2011 economic growth forecast to 4.6 per cent, which is below the government's target, due to slower exports. It had initially expected the gross domestic product (GDP), a measure of the economy, to grow by 5.2 per cent. The official forecast is for GDP to grow by 5 to 5.5 per cent this year. Executive director Dr Zakariah Abdul Rashid said although there was growth in the third quarter, which spans from July to September, it would be impacted by slowing activities in sectors like manufacturing. "Further implementation of Economic Transformation Programme (ETP) projects and 2012 Budget handouts will boost domestic demand but unlikely to offset underperformance in net exports," he warned. For next year, the think tank has revised its GDP growth forecast to 5 per cent but Zakariah warned this would have to be reviewed with a "global economic outlook remaining fluid and increasingly worrying". He expects economic growth to moderate from the second half onwards arising from weaker exports. Exports grew by 4 per cent in the second quarter this year, down from 4.9 per cent in the first quarter. In the second quarter, all economic sectors with the exception of agriculture, registered slower year-on-year rates of expansion. MIER also expects the Consumer Price Index (CPI), which measures inflation, to moderate to 3.1 per cent in 2011, before trending lower to 2.7 per cent in 2012. This, said Zakariah, was based on a weaker economic outlook and lower global commodity prices ahead. It reckons that Bank Negara Malaysia would keep the Overnight Policy Rate at 3 per cent through 2012, to support growth. Banks use the OPR to set lending rates and keeping it low would stimulate economic activities.