Uncertainties In External Environment Pose Downside Risks To Growth Prospects

KUALA LUMPUR, Aug 12 (Bernama) -- While domestic conditions remained resilient, uncertainties in the external environment may pose downside risks to Malaysia's growth prospects. Bank Negara Malaysia (BNM or Malaysia's Central Bank) said the Malaysian economy was expected to grow between 4.0 and 4.5 per cent this year, with domestic demand remaining the main driver of growth, supported primarily by private sector spending. Going forward, it said global economic activity was expected to remain subdued despite unprecedented easing of monetary conditions in major and regional economies. The pace of expansion in advanced economies was expected to remain modest while in Asia, domestic demand would continue to underpin growth, it said in a statement. The central bank said further bouts of financial market volatility resulting from rising concerns over the outcome of the US presidential elections and increased risks of political contagion following the United Kingdom's European Union referendum could materially affect markets through international capital flows. Overall, it said, global economic conditions have become increasingly challenging, with higher downside risks. For Malaysia, domestic demand would remain the main driver of growth, said BNM. Private consumption, it added, was projected to expand further, underpinned by continued growth in wages and employment, as well as, additional disposable income from government measures. While the growth in private investment has moderated due to lower capital expenditure in the oil and gas sector, overall investment would remain supported by the implementation of infrastructure development projects and capital spending in the manufacturing and services sectors. Exports, however, are projected to remain weak given the subdued global demand, it noted. --BERNAMA