Malaysian economy to grow at 5-5.5% next year

KUALA LUMPUR: The Malaysian economy is projected to continue its strong growth momentum with a real gross domestic product (GDP) expanding between 5.0% and 5.5% in 2018, mainly driven by resilient domestic demand and favourable external factors.
According to the Economic Report 2017/18 released in conjunction with Budget 2018 announcement, gross national income (GNI) per capita is estimated to increase by 5.1% to RM42,777 against RM40,713 in 2017, given the robust economic development.
Despite the strong growth momentum, Malaysia as an open economy is not immune to external headwinds, including rising protectionism, policy uncertainties in advanced economies, and volatility in the financial markets, said the report.
"Nevertheless, structural reforms undertaken over the years to diversify the economy and strengthen the financial system have provided sufficient buffer to weather these external challenges," it added.
Meanwhile, inflation will remain benign at between 2.5% and 3.5%, while the economy continues to operate under full employment.
Household spending will also remain as the key source of growth, benefiting from higher income following stable employment conditions and firmer commodity prices.
Private investment is forecast to remain resilient and expected to expand by 8.9% to account for 18.1% of GDP, primarily attributed to capital outlays in the services and manufacturing sectors.
The private sector will continue to spearhead growth, while the public sector will remain committed towards its fiscal consolidation path.
"Public sector expenditure is forecast to decline by 0.4%, following lower public investment, which is projected to contract by 3.1%, largely due to lower capital outlays by public corporations," said the report.
Meanwhile, on the supply side, growth is expected to be broad-based with positive contribution from all sectors of the economy.
The services sector is projected to grow at 5.8%, increasing its share to 54.8% of GDP with all sub-sectors continuing to expand, while the manufacturing sector is forecast to increase by 5.3%.
The agriculture sector is expected to grow at 2.4%, contributed by both the commodity and non-commodity sub-sectors, while the construction industry is forecast to grow at 7.5% supported by ongoing infrastructure projects.
Gross exports are projected to expand 3.4% to RM948.7 billion in 2018 against RM917.5 billion in 2017, led by continued demand for electrical and electronics products and commodities while gross imports are forecast to grow 3.5% to RM851.7 billion from RM822.9 billion last year, reflecting steady investment activity.
The deficit in the services account is projected to widen to RM22.7 billion from RM18.8 billion in 2017, with the transport and other services accounts expected to remain in deficit following favourable growth prospects in trade- and investment-related activities. — Bernama