A leading Malaysian thinktank today raised its 2005 economic growth forecast to 5.3 percent from 4.9 percent tipped earlier in light of a strong third-quarter performance.

The independent Malaysian Institute of Economic Research (Mier) said it raised its outlook, after having lowered it from 5.1 percent in October, after third-quarter growth came in at a stronger-than-expected 5.3 percent.

Mier dropped its growth projection two months ago due to high crude oil prices and a fragile electronics sector.

For 2006 and 2007, gross domestic product (GDP) growth was forecast at 5.5 percent and 5.8 percent respectively, Mier's executive director Mohamed Ariff Kareem told reporters.

"Our survey estimates that the country has about six percent growth potential but it will remain one of the better economies in the region," he said at the National Economic Outlook Conference 2006-2007.

Timing of GST

For next year, he said inflation would pick up as the government reduces petroleum subsidies - pushing up fuel prices and utility rates, especially electricity tariffs.

The Mier chief also urged the government to review the timing of the introduction of a goods and services tax (GST) in 2007, saying it could further dampen still-weak consumer sentiment.

The central bank said last month that Malaysia's economy grew 5.3 percent year-on-year in the third quarter, up from a revised 4.4 percent growth rate in the second, led by the services sector.

Malaysia's economy expanded 7.1 percent in 2004.