(AFP) The country's economy will grow 0.3 percent this year, 3.2 percent next year and 5.7 percent in 2003, the Malaysian Institute of Economic Research (MIER) predicted today.

The independent think-tank said in its economic outlook report that while gross domestic product (GDP) growth is expected to be positive this year overall, the second half is seen declining 1.2 percent year-on-year.

"Positive growth in 2001 (is expected) thanks to the fiscal boost, year-end festivities, a slight uptick in consumer sentiment and improved leading indicators," MIER said.

It added private investment is expected to decline by 6.7 percent in 2001 before recovering in 2002 with 7.9 percent growth.

MIER said that in the wake of the September 11 attacks on the US, exports are expected to fall sharply, foreign direct investment to shrink and business and consumer confidence to soften further.

Other factors

Further downside to its forecast could come from the conflict in Afghanistan escalating, the US economy softening further and the possibility of the Japanese economy going into recession, it added.

The government this month revised downwards its 2001 GDP growth forecast to 1.0-2.0 percent because of the "greater-than-expected" slowdown in the world economy.

In the budget presented last month, Malaysia cut taxes and boosted spending in an effort to fight the effects of the slowdown.