KUALA LUMPUR: The World Bank has raised its projection of Malaysia’s economy to grow by 5.4% this year from its earlier projection of 5.2%.

In its World Bank East Asia and Pacific Economic Update April 2018 edition, it said Malaysia’s growth is expected to remain strong in the near term, albeit at a more moderate pace compared to 2017.

“In aggregate, Malaysia’s economic growth rate will be supported by the continued strength of private consumption,” it said.

The World Bank said with the anticipated decline in public investment, gross fixed capital formation will be driven mainly by the expansion of private sector capital expenditure, which is expected to be sustained by the continued flows of infrastructure projects and capital investments in the manufacturing and services sectors.

“The strength of Malaysia’s export performance is expected to continue into the first half of 2018 in tandem with the ongoing cyclical upturn in global trade, although at a lower rate than the preceding year,” it said.

Meanwhile, the World Bank said the government remains committed to fiscal consolidation amid a continued expectation of the fiscal deficit target of 2.8% of gross domestic product being achieved in 2018.

Malaysia’s social protection system would be strengthened with the introduction of the Employment Insurance Scheme in January 2018, it said.

“Looking further ahead, Malaysia’s economy is projected to expand at 5.1% in 2019 and 4.8% in 2020, and is expected to achieve high-income country status between 2020 and 2024,” it said.

The downside risks to Malaysia’s growth prospects, according to the report, were related mainly to the external environment.

In particular, an abrupt adjustment to global financial market conditions, or weaker than expected growth in the major economies and export demand could have disproportionately negative spillovers on Malaysia, given its high level of integration with the global economy and financial mar- kets, it said. — Bernama

Source: The Malaysian Reserve