Nov. 3 (Bloomberg) -- Malaysia’s economy may emerge from its recession earlier than the government predicted previously as stimulus measures help boost local demand, Prime Minister Najib Razak said today.

“The outlook for positive growth in the third quarter has brightened,” Najib said in a speech in Kuala Lumpur. The government’s stimulus measures totaling 67 billion ringgit ($20 billion) “have helped our economy through a global recession and generated much-needed economic activity to make up for a slowdown in the private sector demand.”

The government had previously expected gross domestic product to expand in the fourth quarter this year after contracting the first nine months. Malaysia raised its 2009 economic forecast last month, joining neighbors including Singapore and Thailand in saying this year’s slump is easing faster than expected as the world recovers from its recession.

Najib said Oct. 23 Malaysia’s $195 billion economy may shrink 3 percent this year, less than an earlier forecast for a contraction of 4 percent to 5 percent. The government expects GDP to expand as much as 3 percent in 2010, helped by a recovery in demand for Malaysian Pacific Industries Bhd. semiconductors, IOI Corp. palm oil and other exports.

To contact the reporter on this story: Soraya Permatasari in Kuala Lumpur at soraya@bloomberg.net

Last Updated: November 3, 2009 03:42 EST