The short war in Iraq and quick containment of the Sars outbreak have put Malaysia's economy on track for sharper growth and a smaller budget deficit next year, the finance ministry said in its annual report today.

The report, issued along with the national budget presented by Prime Minister Dr Mahathir Mohamad, forecast real gross domestic product growth in 2004 at 5.5-6.0 percent, compared with 4.5 percent this year and 4.1 percent in 2002.