Posted on 16 Apr 2009
The economy should perform better in the second half of the year as the fiscal stimulus packages are implemented and the effects of the supportive monetary environment kick in, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said.
“The first quarter was very much affected by external economic contraction taking place, our exports numbers have shown that,” she said.
Malaysian Institute of Economic Research expects local exports to decline 24% this year on sagging worldwide demand, the think tank said in its report yesterday.
Speaking after launching the Interbank Murabahah Master Agreement (IMMA) and Master Agency Agreement (MAA) yesterday, Zeti said the domestic economy was still growing and “this is what we need to sustain the country’s economy”.
Asked if the central bank would revise its economic growth target, she said: “Right now, we have made the assumption that in the second half, the external environment will stabilise and that the fiscal stimulus packages will be implemented.”
“And so, in the current environment, our projection is flat growth as the contraction of the external sector would be offset by domestic demand,” she said.
Bank Negara has projected the economy to register a growth rate of -1% to 1% this year.
On whether the economy had bottomed, Zeti said: “No, it is not clear yet what the direction is in the global economy.”
There was “some stabilisation” taking place but “we still have to wait and see”, she said.
To another query on interest rates, the governor said the central bank had already adopted an aggressive stance and now the focus was to ensure that lending continued.
Zeti said there was no need to raise banks’ minimum capital requirement at the moment.
Non-performing loans were at a historical low now at just over 2%, she said, adding that even if the rates rose, banks were “well positioned to absorb it”.
Zeti said
“The currency is not a policy instrument but is used to facilitate trade and investment,” she said.
Meanwhile, the newly launched agreements have been adopted by the members of the Association of Islamic Banking Institutions Malaysia (AIBIM) for their deposit-taking and placement transactions.
AIBIM president Datuk Zukri Samat said the adoption of the IMMA and MAA documents would help increase the intensity of Islamic interbank activities.
Like any other money market products, the success of commodity murabahah-based instruments would depend largely on the existence of a standardised document as well as a universally-acceptable structure that was widely recognised by the market, he said.
