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Malaysia's Zeti says risks to growth outweigh price concerns

[KUALA LUMPUR] Malaysia's growth faces greater risks from a slowdown in the world economy than inflation, central bank Governor Zeti Akhtar Aziz said.

The threat of faster inflation will abate after the first quarter of 2016 and interest rates at current levels are supportive of growth, Zeti said in an interview in Lima, Peru Sunday. Gross domestic product will increase about 5 per cent this year, and the expansion will be in the same range in 2016 should risks to global growth not materialize.

Malaysian policy makers have been struggling to boost confidence in its economy and finances since oil prices started slumping late last year and as allegations of financial irregularities at a state investment company hurt sentiment. Political tensions in the Southeast Asian nation have also increased as Prime Minister Najib Razak battled accusations of impropriety over campaign donations that ended up in his private accounts.

"People are distracted now because our country rarely had political developments of this nature," Ms Zeti said. "Malaysia's policy decision process goes on, regardless of these political tensions."

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