SERC sees Malaysia GDP growing at 5% in 2017

Malaysia should be better positioned to benefit from a recovery in the global economy, particularly trade.

KUALA LUMPUR: Malaysia's economy is expected to grow at a faster this year driven by domestic demand and strengthening exports, says the Socio-economic Research Centre Sdn Bhd (SERC). 

The research institution raised its 2017 gross domestic product (GDP) growth forecast for Malaysia to 5% from 4.3% previously.

This compared with a GDP growth of 4.2% last year.

"The growth is broad-based, firing on twin engines - domestic demand, especially private sector expenditure, and strengthening external demand," SERC said in its quarterly economy tracker briefing on Wednesday.

SERC however expected Malaysia's GDP growth to slow moderately to 4.9% in 2018.

It also expected Bank Negara Malaysia to maintain the overnight policy rate at 3% through 2017.

SERC said monetary policy must be well calibrated to support growth and anchor inflation expectations while mindful of global financial conditions.

"While the ringgit has continued to stabilise, headwinds remain, emanating from the potential risks associated with the monetary policy tightening, political development in advanced economies as well as geopolitical tensions," SERC said.