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M’sia to take extra measures if “Global economy worsen”

Posted on: March 26, 2009


Bernama – Thursday, March 26

KUALA LUMPUR, March 25 (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, Bank Negara Governor Tan Sri 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 Bank Negara 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 U.S. is aware of the implications. — BERNAMA

NBB/SM SD

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