KUALA LUMPUR: Ongoing political noise has weighed on sentiment regarding Malaysian financial assets and the ringgit, with a risk of this further constraining policy space and filtering into the real sector economy, especially productive investment, says the World Bank.
It said on Monday Malaysia's economic growth is expected to moderate to 4.7% this year and 2016 from 6% in 2014 on weaker external outlook, before picking up mildly towards 5% in 2017 as exports strengthen then.
World Bank said the urgency had increased for Malaysia to continue making structural reforms and investments necessary to shift towards a more skilled intensive, high productivity economy.
"The moderation in output growth should be seen in the context of the Malaysian economy weathering a marked deterioration in the external balances, which has weighed on the currency, " it said.
World Bank noted that while strong domestic demand had helped shield Malaysia's economy from the impact of weakening exports until the early part of 2015, a broad based moderation in output growth is now underway.
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