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PUTRAJAYA - MALAYSIA'S economy can hit the official 5 per cent growth target this year as fundamentals are strong, the prime minister said on Monday, vowing to put an end to political uncertainties that have roiled financial markets.
'I think 5 per cent is achievable,' Mr Abdullah Ahmad Badawi told Reuters in an interview at his office in the administrative capital.
The fallout from the global credit crisis is being felt in many Asian economies, but Mr Abdullah said: 'We have to manage, reduce the negative impact. Next year we will see what happens, because a lot of things are happening so fast, the volatility of the world economy is very high.'
Malaysia's economic outlook is clouded by political uncertainty as investors fear a tussle for power after opposition gains in elections earlier this year that could pave the way for a change in government and policy.
The Southeast Asian country has also been rocked by sodomy allegations against opposition leader Anwar Ibrahim and a fresh assertion by a private detective - which was abruptly retracted - linking Deputy Prime Minister Najib Razak to a murder case.
The benchmark Kuala Lumpur Composite Index fell to a 16-month closing low on Friday as nervous investors fled and it was another 0.43 per cent lower at 1,129.27 at 0741 GMT on Monday.
The index has lost about 20 percent so far this year.
Mr Abdullah, who is also finance minister, said political stability would soon be restored.
'It will stabilise,' he said. 'If we work hard, soon it will stabilise. If we don't work hard for it, then of course anything can happen. All of us have to cooperate.'
The prime minister, who faced calls to step down following his coalition's poor election showing, declined to elaborate.
He said he was ready to take action to stamp out political instability but did not say what he might do.
'If we think it's necessary, at the right time, why not?' Mr Abdullah said, when asked if he was prepared to crack the whip.
The political turmoil comes at a time when Malaysia's economy looks set to slow and inflation is rising.
Economists polled by Reuters last week forecast that growth would hit a three-year low of 5.3 per cent in 2008.
Annual inflation in May was at a 22-month high of 3.8 per cent and is certain to rise further after an increase in government-set fuel prices in June.
'We will continue to take whatever measures necessary to ensure that the investment climate in Malaysia will continue to be favourable,' Mr Abdullah said.
'It's not a case of weakening fundamentals. The fundamentals of the economy are still strong.'
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