The country's economy grew four percent in the March quarter and is o­n track to reach the official forecast of 4.5 percent this year, the central bank said today.

Growth in all economic sectors boosted gross domestic product (GDP) growth in the first quarter, which was up from 1.3 percent in the same period last year, said Bank Negara governor Zeti Akhtar Aziz said.

"The real (first quarter) GDP was broad-based with continued expansion across all sectors with the main impetus from manufacturing and services sectors," she told a news conference.

"The impact of heightened external uncertainties o­n the economy was largely mitigated by higher commodity prices, improved disposable income, resilient domestic demand and sustained external demand."

Zeti said the economy had remained resilient despite uncertainties due to the Severe Acute Respiratory Syndrome (Sars) outbreak.

The near-term outlook was favourable following the government's RM7.3 billion economic stimulus package unveiled last week to mitigate the blow of Sars, she said.

"We have a high degree of confidence that the economic forecast is achievable," she said, adding the economy was expected to strengthen in the second half of the year.

Growth forecast cut

Malaysia has cut its official GDP growth forecast to 4.5 percent this year from 6.0-6.5 percent due to the Iraq war and the Sars outbreak.

Under its stimulus package, it cut interest rates, set up a o­ne billion ringgit relief fund and gave tax breaks to the tourism sector, liberalised foreign investment rules and offered loan programs for troubled traders.

But economists said it would still be tough to reach the targeted 4.5 percent growth given the global economic uncertainties and renewed threats of terrorist attacks.

In the March quarter, the manufacturing sector grew 5.2 percent, reversing a contraction of 2.3 percent in the same period last year but lower than the 5.7 percent growth in the previous quarter.

The services sector grew four percent, down from 4.5 percent a year ago.

Construction expanded 1.2 percent against 2.9 percent a year earlier, mining grew 3.8 percent from 1.4 previously while agriculture maintained a 3.6 percent growth.

For the first time since the 1997-1998 Asian financial crisis, the central bank said net non-performing loans fell to below 10 percent at the end of March based o­n a three-month classification and to seven percent o­n a six-month classification.