KUALA LUMPUR (Malaysia): The government will continue to closely monitor global economic developments and take steps to ensure Malaysia's economy continues to grow and is managed on an even keel.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said Malaysians should expect challenging times ahead due to a weakening economic climate.

A number of countries are heading into recession, and Malaysia -- while unlikely to face one itself -- would certainly not be spared the growing (economic) turmoil, he said.

However, Abdullah said the government had taken pre-emptive measures to cushion a possible full-blown impact.

On its part, Abdullah said the government had announced a RM7 billion stimulus package, alongside plans to liberalise the services sector.

"We have also taken steps to relax the guidelines for foreign investments," he said at the opening of Ekspo Cintai Malaysia 2008 at the Malaysia International Exhibition & Convention Centre here yesterday.

The exposition, also known as the 7th Malaysia International Trade and Consumer Fair, is organised by the Chinese Chamber of Commerce & Industry of Kuala Lumpur and Selangor (KLSCCI).

Abdullah said due to the worldwide economic slowdown, it was now more important that emphasis be placed on the development of small and medium enterprises (SMEs) as an important driver for economic growth.

SMEs contributed 32 per cent of Malaysia's gross domestic product, made up 56 per cent of total employment, and accounted for 19 per cent of total exports, he said.

"Therefore, it is exceedingly clear that as we attempt to ride out the storm ahead of us, we must stand committed towards the development of a robust and competitive SME sector.

He said the government had implemented a number of programmes to enhance the capacity and capability of SMEs.

"I am glad to note that the private sector is also playing its part to promote SMEs."

For instance, banking institutions and development financial institutions approved RM63.2 billion in funding to over 132,000 SME accounts last year.

However, Abdullah said more work needed to be done.

He said Malaysian SMEs must not be contented with the jaguh kampung (local champion) tag, but should work harder towards being global household names.