KUALA LUMPUR: Malaysia's economy will expand by between five and six percent in 2011, spurred largely by strong domestic demand, the central bank forecast Wednesday.
The figure, however, represented slower growth after an impressive 7.2 percent expansion in 2010. The export-dependent economy suffered a 1.7 percent contraction in 2009 due to the global slowdown.
"The Malaysian economy is projected to grow by 5 to 6 percent in 2011," said Zeti Akhtar Aziz, the governor of the central bank, in its annual report.
"The growth momentum will be underpinned by strong domestic demand, emanating primarily from private sector activity," she added.
Zeti said inflation in Southeast Asia's third largest economy could increase further in 2011 to average between 2.5 and 3.5 percent, driven primarily by rising global commodity and energy prices.
Inflation in 2010 stood at 1.7 percent.
Zeti said unemployment was projected to remain at 3.2 percent of the labour force in 2011.
Malaysia could be affected by the spillover effects of geopolitical tensions in the Middle East and the recent earthquake and tsunami in Japan, she added.
Prime Minister Najib Razak has unveiled a series of economic reforms since taking power in 2009, aimed at creating 3.3 million jobs and pushing Malaysia towards developed nation status by 2020.
He has promised major infrastructure projects and financial market liberalisation, vowing to stimulate the private sector to attract much-needed foreign investment.
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