However, there are some downside risks in the international economic scenario at the moment. These include possible adjustment measures in the United States to the very high Dow Jones performance and the threat of inflation given the very strong, prolonged economic growth in the US, adjustments in the USD-Yen alignment and the Chinese economic position in particular the possibility of a devaluation of the Yuan in the near future. A slow Japanese economic recovery could also influence the international demand for our exports. In the domestic economy, the fiscal and monetary stimulus will help expand total expenditure for both consumption and capital formation. The Government is monitoring project implementation very closely.
Data indicate that public expenditure has increased.
Rising confidence from the improved economic situation and employment prospects will also assist domestic expenditures, especially for consumption. The pick up in economic activities will be further assisted by a few other factors. The pegging of the ringgit will continue to provide certainty and stability to our businessess as well as raise the competitiveness of our exports. In addition, there are indications of a rise in the import of investment and intermediate goods which will later find their way into production for exports. In addition, inflation is also expected to be much under control especially with the continued negative trend in the producer price index over the past several months.