KUALA LUMPUR, April 11 — Malaysia can cushion the effects of US Federal Reserve's (Fed) tapering if it can contain the country's rising inflation rate.

Dan Steinbock, Research Director, International Business, India, China and America Institute, said Malaysia's inflation was a bit high.

“The rate is expected to rise by between 3.4 and 3.5 per cent for this year and next compared to last year's 2.1 per cent,” he said at a forum, 'The Fed's Tapering: Economic and Strategic Impact from Advanced Economies to Emerging Asia' here today.

The forum is organised by the Institute of Strategic and International Studies Malaysia.

Steinbock said Malaysia's gross domestic product (GDP) growth for 2014 and 2015 was forecast to rise by between 4.7 and 4.8 per cent compared with 4.5 per cent for 2013.

He said the country has, however, made progress in containing the increase in inflation compared with a few months earlier.

Moving forward, he said, Malaysia also needed to avoid the middle-income trap to remain competitive.

“When the US tapering moves towards a rate increase, investors would become more discriminating in picking the countries and production innovations they have to offer.

“Thus Malaysia needs to aggressively move towards innovation,” he said. — Bernama