KUALA LUMPUR: Bank Negara Malaysia (BNM) says critical reforms and structural adjustments remained a priority to ensure the future growth of the Malaysian economy is sustained.
In its Annual Report 2016 release today, the central bank said, these were due to the impending challenges posed by global and domestic trends such as ageing population, influx of new technologies and slower productivity growth.
Among the measures included efforts to enhance export competitiveness, on-going investments to modernise physical and virtual infrastructure and policies to develop a high quality workforce by improving the quality of the education system, it said.
The central bank said the Malaysian economy recorded a growth of 4.2 per cent compared with five per cent in 2015 despite considerable external and domestic headwinds.
"The fundamentals of the Malaysian economy had accorded Malaysia the ability to weather external and domestic challenges," it said.
BNM said the diversified sources of growth in the economy had helped to contain the spillover effects of sector-specific shocks.
"Stable labour market conditions amid continued wage growth continued to support household spending.
"Healthy financial institutions and ample domestic liquidity also ensured orderly financial intermediation," it said.
It said Malaysia's external position remained strong, supported by ample international reserves and manageable levels of external debt notwithstanding the weak global demand.
An appropriate and timely monetary policy response and targeted pro-growth measures played a key role in supporting growth during the year, it said.
The central bank said the cut in the Overnight Policy Rate was complemented by measures to increase household disposable income and support business activities.
"These included policies to create a conducive ecosystem for a sharing economy to thrive, temporary reduction in employees' Employees Provident Fund contributions, higher 1Malaysia People's Aid payouts and tax incentives to spur business activities, particularly among the small and medium enterprises," it said. -- BERNAMA