Threat from global slowdown more serious than inflation for Malaysia: Central bank chief

Bank Negara Governor Zeti Akhtar Aziz revealing Malaysia's GDP figures in Kuala Lumpur on Aug 13, 2015.
Bank Negara Governor Zeti Akhtar Aziz revealing Malaysia's GDP figures in Kuala Lumpur on Aug 13, 2015. PHOTO: REUTERS

KUALA LUMPUR (BLOOMBERG) - 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, she said in an interview in Lima, Peru on Sunday (Oct 11). 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 materialise.

Malaysian policymakers have been struggling to boost confidence in its economy and finances since oil prices started slumping late in 2014 and as allegations of financial irregularities at a state investment company hurt sentiment. Political tensions in the South-east Asian nation have also increased as Prime Minister Najib Razak battles 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."