Malaysia posted its fastest annual GDP growth for a decade last year, and we expect the economy to expand at a healthy pace in 2011. Tough conditions in the West are likely to weigh on exports and industry, but domestic demand should lead the way. Price pressures will rise and so more monetary tightening should be expected. We forecast that the policy rate will be hiked next month and will reach 3.5% by year-end, from 2.75% now.
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