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KUALA LUMPUR: Malaysia is unlikely to slip into recession despite slowing exports, but the economy may require another round of stimulus measures, the central bank chief said in comments published Wednesday.
"If conditions in the major economies worsen, then further stimulus will definitely be necessary to prevent our economy from slipping into negative territory," Bank Negara governor Zeti Akhtar Aziz was quoted as saying by the New Straits Times.
"We believe the economy can ride out this challenging period because of the positive conditions that prevail - with our labour market relatively stable, access to financing and both the government and the central bank having the flexibility to implement stimulus," she said however.
"Although there has been a slowing in our export growth in the second half of this year, our domestic demand has held its ground."
Malaysia is tipped for growth of up to 3.5 per cent for 2009, well down on earlier projections as the global crisis bites into export demand and foreign direct investment inflows.
The government has already announced a 7.0 billion ringgit (US$2.0 billion) economic stimulus package, and Zeti said that a second round could be required to boost growth.
"The key to achieving domestic demand is sustained private consumption and increased government expenditure. Should we require a further stimulus, the government has the flexibility to do so," she said.
Zeti told the daily that there was room for further pump-priming because the government's debt level was low at 34.8 per cent of gross domestic product.
- AFP/yb
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