Malaysia to benefit from lesser reliance on commodity-related revenue in 2016

The World Bank Group has forecast that Malaysia's economic growth will slow to 4.5 per cent this year from 4.7 per cent in 2015 on slowing domestic demand, but benefit from lesser reliance on commodity-related revenue.

According to the World Bank's January 2016 Global Economic Prospects, Malaysia's growth is almost similar to the projection for developing economies, which are expected to expand by 4.8 per cent this year from 2015's 4.3 per cent.

Meanwhile, global growth is expected to pick up modestly to 2.9 per cent from 2.4 per cent last year, driven by stronger growth in advanced economies.

"Firmer growth ahead will depend on continued momentum in high income countries, the stabilisation of commodity prices, and China's gradual transition towards a more consumption and services-based growth model," the World Bank said.

It added that global economic growth was less than expected last year after falling commodity prices, flagging trade, capital flows, and episodes of financial volatility sapped economic activity.

On the East Asia and Pacific region, the World Bank forecast the region's economic growth to slow to 6.3 per cent this year from 6.4 per cent in 2015 weighed on by slower growth in China.

"Growth in China is forecast to ease further to 6.7 per cent this year from 6.9 per cent last year," it said.

It said slowing growth in the world's second largest economy is expected to offset a modest pick-up in growth among members of ASEAN this year.

However, it said the region is expected to benefit from the strengthening recovery in advanced economies, low energy prices, improved political stability, and continued favorable conditions in global financial markets, despite anticipated monetary policy tightening in the US.

It added that deepening regional trade and investment would boost economic activity and create jobs.

"The Trans-Pacific Partnership trade accord, if implemented, would lift trade and growth in the region," the World Bank highlighted.

It said growth in the East Asia and Pacific region slowed to an estimated 6.4 per cent in 2015 from 6.8 per cent previously, because of continued growth deceleration in China and in commodity exporters, including Indonesia and Malaysia.

The slowdown, however, was offset by the strong performance by commodity importers, especially Vietnam and the Philippines, and a moderate recovery in Thailand.