PETALING JAYA: According to World Bank simulations, Malaysia is projected to achieve high-income status as early as 2020.
The World Bank's Malaysia Economic Monitor report published on Thursday (Dec 15) showed that Malaysia is projected to exceed the threshold that defines high-income economy status at some point in the period from 2020 to 2024.
The World Bank currently defines high-income economies as those whose gross national income (GNI) per capita stands at US$12,236 (RM49,916.76) or more.
In 2017, Malaysia's average GNI per capita is estimated to stand at US$9,660 (RM39,407.97), just short of US$2,576 (RM10,508.79) of the defined threshold level.
"World Bank Staff projections suggest that Malaysia could achieve this threshold level by 2021 under the baseline scenario, or by 2020 in the high episode scenario and by 2024 in the low episode scenario," said the report.
The World Bank also projects Malaysia's economy to continue at a strong pace of 5.2% in 2018, which is slightly slower compared with the expected 5.8% growth this year.
The World Bank raised its 2017 growth estimate for Malaysia's economy to 5.8%, which would be the highest annual growth rate since 2014.
It had previously projected a growth of 5.2% in October, and this is the third time the World Bank revised the growth forecast for Malaysia this year.
Much of the momentum will carry through to next year at a 5.2% growth rate for 2018.
"In 2017, Malaysia experienced a significant acceleration in growth due to a confluence of domestic and external factors," said the report.
"The pace of GDP growth quickened during the first three quarters of 2017, supported by strengthening domestic and external demand," it said.
The World Bank said that private consumption grew strongly, driven by improved labour market conditions, sustained wage growth, and the implementation of income support measures to benefit the low and medium income households.
Capital expenditure also increased due to higher private and public investment.
With both domestic and external demand expected to remain robust, the World Bank said that Malaysia's growth is likely to remain strong into 2018.
With a strengthening economy, the World Bank said that it offers an opportunity for Malaysia to focus on structural reforms for the transition to a high-income economy.
"Malaysia's stronger-than-expected growth creates opportunities for the Government to increase its initiatives to address the deeper structural challenges that limit the economy’s growth potential," it said.
This may lead to further effort to encourage innovation, to invest in new skills, and to leverage the potential of the digital economy.