Malaysia's economy to grow at slower pace of 4.7% this year-World Bank

In the East Asia Pacific Economic Update released today, the World Bank said lower oil prices would dampen growth through delays in capital expenditures in the oil and gas sector, a key driver of the recent investment boom.

"Private consumption will moderate on tighter credit and a small impact from the introduction of the Goods & Services Tax, before rebounding in 2016.

"A slight uptick in inflation is therefore expected despite low readings in the first half as lower oil prices are reflected throughout the economy," it said.

The World Bank said the current account was expected to narrow, although upside was possible if manufacturing export growth retains momentum from the fourth quarter.

It said further declines in oil prices were the key risk to near term growth, fiscal and external accounts.

Other risks included weakness in the global economy that would dampen export demand, renewed volatility in capital flows and the realization of contingent liabilities, which have increased since the global financial crisis, it said.

The World Bank said favorable economic prospects would support overall household income growth.

The bank said Malaysia’s economy expanded by six per cent in 2014, while poverty declined further.