May 31, 2006, 5:58AM
© 2006 The Associated Press
KUALA LUMPUR, Malaysia — Malaysia's economy expanded 5.3 percent in the first quarter compared to the same quarter last year, driven by strong external demand, according to central bank data released Wednesday.
The central bank also retained its official gross domestic product growth forecast of 6 percent for the full year.
"Malaysia will benefit this year from a surge in domestic investment, strong external demand and strong output from the agriculture sector," bank governor Zeti Akhtar Aziz told reporters.
Zeti reiterated that the bank expects inflationary pressures to moderate later in the year, with inflation to average between 3.5 percent and 4.0 percent.
She downplayed the potential impact of an average 12 percent increase in electricity prices starting June 1, saying it is unlikely to "have a significant effect on the rate of inflation."
The Malaysian economy also isn't facing wage pressures or capacity constraints, Zeti said, reiterating that the ringgit's rise against the U.S. dollar in recent months reflects broad appreciation of regional currencies during the same period.
"We want to see orderly movements in (the exchange rate). ... The central bank will be there to ensure we do not have excessive, extreme volatility in the currency," Zeti added.