KUALA LUMPUR: Bank Negara Malaysia has projected Malaysia to grow by between 4.5 per cent and 5.5 per cent this year.
Its growth forecast was same as that announced by the Finance Ministry in January.
The economy grew by 6 per cent last year, placing it as one of the fastest growing economies in Asia.
According to the Bank Negara Annual Report 2014, domestic demand, anchored by private sector expenditure, will continue to be the pillar of growth in 2015, driven by private sector spending.
The report also cautioned that the international economic and financial landscape has become more challenging since late 2014 and into 2015.
As a highly open economy, Malaysia’s economic outlook will be affected by these developments.
Export growth is projected to be lower due to the low commodity prices although a positive development for Malaysia’s exports in 2015 is the expected improvement in the US economy and the sustained growth of regional economies.
Lower energy prices will likely provide a lift to consumption and investment spending for Malaysia’s key trading partners.
Global demand for mobile devices, tablets and automotive sensors continues to be strong which will drive Malaysia’s manufactured items, which make up 77 per cent of total exports.
The report said the more diverse nature of exports in terms of products and markets will help sustain a surplus in the current account balance.
Malaysia’s balance of payments position is expected to remain resilient, with the current account balance remaining positive of about RM21.4 billion or 2.0 to 3.0 per cent of gross national income (GNI).
Also, a stronger travel account in conjunction with “Malaysia - Year of Festivals 2015” tourism promotion is expected to provide a lift to the services account.
After registering a negative growth in 2014, capital imports are expected to recover, reflecting continued investment activity which will improve Malaysia’s productive capacity and export competitiveness in the medium- and long-term.
At the same time, uncertainties regarding the strength of global economic outlook and the sharp decline in the global oil prices have raised concerns on the country’s fiscal and balance of payments positions.
Although the commodity sector is an important contributor to production, exports and employment, the highly diversified structure of the Malaysian economy provides a buffer against the consequences of the sharp decline in global oil prices.