Malaysia's economy is expected to grow steadily this year, expanding between five to six per cent, anchored by domestic demand, a gradual improvement in the external sector and brisk investment activities, Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said.
Other supportive factors include stronger growth in consumption demand of six to seven per cent, robust private investment driven by capacity expansion by domestic-oriented firms and continued implementation of projects with long gestation periods," she said at the launch of the central bank's Annual Report 2012 today.
Zeti said investments by external-oriented businesses are also expected to be higher amid the gradual improvement in external demand, while private consumption is projected to grow at a more moderate rate in the second half of the year.
In addition, government spending will record lower growth given the ongoing consolidation of the governments fiscal position and as the role of the private sector gains greater significance.
She said inflation would average two to three per cent this year taking into account the expected higher global prices of selected food commodities and the adjustments to domestic administered prices.
"The outlook for domestic financial stability this year remains positive, supported by strong fundamentals in the Malaysian financial system.
"While the external environment is expected to remain challenging, potential risks to domestic financial stability will mainly be from a general weakness in the external economic conditions which is transmitted through the trade channel," she added.
Zeti said the Malaysian financial sector is well placed to cope with such adverse external developments, given the strong financial buffers of financial institutions and comprehensive institutional arrangements in place for responding to system-wide risks.
"Liquidity and funding conditions in 2013 are also expected to remain supportive of domestic intermediation," she added.
She said this year, macro surveillance and supervisory activities would continue to focus on business expansion and lending activities of non-bank financial institutions, the high leverage of the lower-income households, alongside developments in the property market.
She said the investment activities would grow at a strong pace of more than 15 per cent.
Other supportive factors include stronger growth in consumption demand of six to seven per cent, robust private investment driven by capacity expansion by domestic-oriented firms and continued implementation of projects with long gestation periods," she said at the launch of the central bank's Annual Report 2012 today.
Zeti said investments by external-oriented businesses are also expected to be higher amid the gradual improvement in external demand, while private consumption is projected to grow at a more moderate rate in the second half of the year.
In addition, government spending will record lower growth given the ongoing consolidation of the governments fiscal position and as the role of the private sector gains greater significance.
She said inflation would average two to three per cent this year taking into account the expected higher global prices of selected food commodities and the adjustments to domestic administered prices.
"The outlook for domestic financial stability this year remains positive, supported by strong fundamentals in the Malaysian financial system.
"While the external environment is expected to remain challenging, potential risks to domestic financial stability will mainly be from a general weakness in the external economic conditions which is transmitted through the trade channel," she added.
Zeti said the Malaysian financial sector is well placed to cope with such adverse external developments, given the strong financial buffers of financial institutions and comprehensive institutional arrangements in place for responding to system-wide risks.
"Liquidity and funding conditions in 2013 are also expected to remain supportive of domestic intermediation," she added.
She said this year, macro surveillance and supervisory activities would continue to focus on business expansion and lending activities of non-bank financial institutions, the high leverage of the lower-income households, alongside developments in the property market.
She said the investment activities would grow at a strong pace of more than 15 per cent.
