Zeti confident Malaysia will meet expansion target

[WASHINGTON] Malaysia will meet its economic expansion target this year even as risks to global growth mount and greater volatility may persist in capital flows, central bank Governor Zeti Akhtar Aziz said.

Price pressures are "quite contained" due to lower fuel and commodity costs and slightly slower demand, Ms Zeti said in an interview in Washington on Saturday where she attended the G20 meeting of finance ministers and central bank governors. Until there is more clarity to the growth and inflation outlook, the current monetary stance remains accommodative and supportive, she said.

Ms Zeti, who leaves her position at the end of the month when her term is up, has helped to curb inflation and keep monetary policy steady to support domestic demand. Prime Minister Najib Razak is counting on consumers to support growth, finding ways to put more money into their pockets as he faces constraints in increasing government spending.

"We have a high degree of confidence" on the 2016 growth target of 4 percent to 4.5 percent, Ms Zeti said. While fuel prices may remain lower for some time, Malaysia's diversified economy that focuses on more consumption-led industries than exports, and reduced dependence on energy revenues means "we are affected but to a much lesser extent than we would have been" in the past, she said.

BLOOMBERG