The country's economy this year is expected to grow by 4.5 percent, up from a previous forecast of 3.2 percent, the Malaysian Institute of Economic Research (MIER) said today.

The private think-tank also predicted growth would further pick up next year to 5.7 percent.

Last month the central bank predicted growth of 3.5 percent this year after the economy expanded an anaemic 0.4 percent last year, slipping into recession in the second half.

Malaysia's economy, heavily dependent on trade, suffered during the global slowdown and technology sector slump after surging 8.5 percent in 2000.

MIER said in its latest economic outlook report that the projection for Malaysia's gross domestic product (GDP) growth is highly dependent on the performance of the US and other major economies.

It noted that there had been upward revisions in forecasts by private analysts and the central Bank Negara.

"These upward revisions were made based on recent trends in US indicators and the plausible impact of Malaysia's planned tax cuts and fiscal spending. It is because of these revisions that we feel there is a case to upgrade Malaysia's GDP growth forecast.

"We feel there is reasonable evidence to support a moderately higher GDP growth forecast for Malaysia of 4.5 percent in 2002," MIER said.

1,000 points possible

MIER's executive director Mohamed Ariff told a news briefing he believed the Kuala Lumpur Stock Exchange composite index could breach 1,000 points before year-end. It closed Wednesday at 792.14.

"Things now appear far better than previously with the rebound in business confidence and consumer sentiment."

He said he was bullish because of the flow of portfolio funds into the region.

The MIER report said both business sentiment and consumer confidence rebounded in the first quarter this year.

The MIER business conditions index stood at 51.9 points in the first quarter of this year, up from 42.3 points in the last quarter of 2001 after six straight quarters of decline.

MIER noted there are signs of an end to the IT slump and overall better sales and production, improving domestic and export orders and heavy investment in new plant and equipment.

The MIER's consumer sentiment index also rose strongly in the first quarter by 10.6 points to 104.4 from the previous three months.