Malaysia fears a war in Iraq would hurt its economic outlook for this year, a junior minister said today. Jamaludin Jarjis, second finance minister, said the country's economy was expected to be affected by slowing global economic growth this year.

"The situation is being further dampened by the uncertainty in the Middle East with a US attack o­n Iraq looking highly likely in the coming weeks," he said in a statement.

Malaysia has predicted six to 6.5 percent economic growth for 2003 but Prime Minister Mahathir Mohamad said in late December growth could be lower at four to five percent.

Jamaludin said 10 special committees have been set up to look into boosting the economy through increasing competitiveness, promoting new growth industries, particularly in services and biotechnology.

Special task force

A special task force headed by the National Economic Action Council would monitor the progress of the committees and put together a growth stimulus package, he said.

Details of the new stimulus measures would be announced by Prime Minister Mahathir Mohamad following the release of the central bank's annual report o­n March 26.

Jamaludin said Malaysia was prepared to consider additional measures in the event of a war.

Malaysia's economy is expected to have grown four percent last year, up from 0.4 percent in 2001, he said.

The higher economic growth for 2002 was due to an improvement in global trade, supported by domestic fiscal and monetary policies.

The government said today Malaysia's industrial output rose 8.0 percent in December from a year earlier and was up 2.5 percent from November.

For the full year, industrial output was 4.2 percent higher, following a 4.0 percent decline in 2001.