The Malaysian economy is forecast to contract at a pace of 2.2% in 2009, faster than government's expectations, as exports decline, reports said Wednesday, citing the Malaysian Institute of Economic Research. The institute had earlier forecast 1.3% growth for 2009.

The think-tank noted that if Malaysia's exports shrink severely in the year, the downturn could be more harmful.

Meanwhile, the institute cut its growth forecast for 2010 to 3.3% from 3.8% estimated earlier.

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