Malaysia's economic growth slowed to 4 percent in the second quarter from a year ago, in line with expectations, while inflation in July came in slightly under forecast, giving the central bank room to hold rates at its next policy review in September. Strong crude oil and palm oil prices supported the trade-reliant economy in the second quarter of 2011, but a slow recovery in manufacturing weighed on overall growth, central bank data showed. Bank Negara, the first Asian central bank to lift borrowing costs in 2010, said the uncertain global environment weighed on the domestic economy, but Governor Zeti Akhtar Aziz said she was confident the country could achieve its targeted growth for 2011. “Right now based on our assessment, growth can achieve at least 5 percent,” she told reporters. “However, if we have a situation where the US or Europe slips into recession or if there is any trigger factor that results in disruptions in the international financial markets, then we have to make a reassessment.” Zeti said she expects growth in the second half of 2011 to be better than the first half because of a lower base last year and accelerated spending from the country's economic transformation program. GDP growth in the first quarter was a revised 4.9 percent year-on-year. The median forecast of 15 economists for Malaysia's full-year GDP growth is 5.0 percent.
