Growth forecast for 2006 may exceed its projected 5.8 percent on the back of a robust economic environment, deputy prime minister Najib Razak said today.

"Despite uncertainties in the external global environment, the Malaysian economy remains strong," Najib said, according to the official Bernama news agency.

"Private investment is expected to increase by 10.1 percent with private consumption growth at a healthy 7.1 percent," he said.

Malaysia's economic growth hit 7.2 percent in 2004, but slowed to 5.2 percent in 2005. Foreign investment also fell in 2005 to RM3.97 billion from RM4.62 billion the year before.

Najib said robust domestic demand in the last few years had enabled the budget deficit to be reduced from 5.7 percent in the year 2000 to 3.8 percent in 2005, and a further 3.5 percent this year.

Expansionary budget

"This healthier fiscal position, coupled with expectations of a slowing down of the global economy, has led the government to implement an expansionary budget for next year, with strong incentives to spur private sector activities," he said.

Malaysia in September scaled back its 2006 economic growth forecast to 5.8 percent from 6.0 percent, citing challenges including high oil prices and competition from China and India.

The economy grew by 5.5 percent in the first quarter of 2006 and 5.9 percent in the second quarter.

The country's central bank is expected to announce third quarter economic growth results later today.