Key political risks to watch in Malaysia

KUALA LUMPUR - Malaysian Prime Minister Najib Razak could call national elections anytime between now and April 2013, but he may wait to announce a generous budget on Sept. 28 as he plays a risky waiting game.

The ruling National Front coalition is widely expected to win the election but further gains by the opposition after its strong performance in 2008 could undermine Najib's standing.

Holding back until after September would give Najib more time to shore up flagging support among ethnic Chinese voters, and to convince Malaysians that his reform efforts are working as he tries to reverse the ruling coalition's worst election showing in 2008.

It would also make him vulnerable to any worsening of the global economy or the emergence of fresh corruption scandals that could push swing voters over to the three-party opposition.

The political atmosphere is becoming more tense as the election looms. Key opposition figures have complained of hate speech and acts of intimidation directed at them.

Its economy grew at a surprisingly strong annual pace of 5.4 per cent in the second quarter, the central bank said, as a jump in private and government investment helped offset weakness in exports. The central bank expects growth this year to be at the top end of its 4-5 per cent forecast.