KUALA LUMPUR, Sept 18 ― Malaysia’s economy will be able to bounce back faster than during the 1997 Asian Financial Crisis as the country’s economic fundamentals are much stronger than before, Bank Negara Malaysia (BNM) Governor Tan Sri Dr Zeti Akhtar Aziz said.

She explained that among other things, the country’s economy was more balanced and diverse, with the private sector driving investments instead of the government, which will allow the economy to rebound in under 18 months.

“So we have a more balanced economy and we also have the policy space and tools. My assessment is: We are not talking about the same conditions prevalent during the Asian financial crisis.

“If we took 1.5 years to recover then, we are going to do in a shorter period now, given the strengthened position prevailing now,” she said in the second-part of an interview with English-language daily New Straits Times published today.

She said that Malaysia’s potential to sustain growth was stronger given higher and more diversified sources of revenue.

She also said higher reserves will contribute in the country’s quick recovery, listing the level now at 7.4 months of retained imports compared with only three months during the 1997 crisis.

The central bank chief assured Malaysians that they need not be worried even though the country’s international reserves is currently below US$100 billion (RM424 billion).

“No, we’re not alarmed as that is why we built our reserves. During the early part of the global financial crisis, it had dropped to US$80 billion but we rebuilt our reserves from the surplus on our current account of the balance of payments and from the subsequent inflows.

She added that the central bank will intervene should the low reserves start to affect the foreign exchange rate.

She admitted however that “domestic issues” have affected economic sentiments, which is why the ringgit has fallen in value, and appears more pronounced when compared against the US dollar which has gained in strength.

But Zeti stopped short of naming specific “domestic issues” that may be affecting the country’s economy.

Since last year, the ringgit has lost over a fifth of its value against the US dollar, now hovering around RM4.20 to the greenback and below the RM3.80 peg imposed during the 1997 Asian Financial Crisis.

Although the sharp drop was not unique as it was similarly observed in other commodities-driven countries including Indonesia and Australia, Malaysia faces political instability amid the 1Malaysia Development Berhad controversy.

The ringgit, however, opened higher against the US dollar today as more investors shifted interest towards emerging currencies, including the ringgit, dealers said.

As at 9.40am, the ringgit was reported to stand at 4.2380 against the US dollar from 4.2500 yesterday.