KUALA LUMPUR: The Asian Development Bank has revised upwards its 2017 growth projection for Malaysia from 5.4 per cent to 5.8 per cent.

The prospect of continuing robust domestic demand and to external demand is more buoyant than earlier expected in September.

In a supplement report released today, the Manila-based bank however lowered its projection for next year from 5.4 per cent to 5.3 per cent, citing base effects.

It noted that Malaysia hit its fastest pace in more than three years, expanding by 6.2 per cent, bringing the average growth in the first three quarters to 5.9 per cent.

Growth was broad-based, led by a solid recovery in exports, particularly for electrical and electronic (E&E) products.

Private consumption was boosted by higher wages in an improving labour market.

Gross fixed investment more than tripled its growth rate over last year with the implementation of several large projects in the service and manufacturing sectors and higher spending by public corporations, driving double-digit growth in imports.

On the supply side, tADB said services had picked up, while agriculture recovered from last year’s slump with better palm oil yields and rubber production.

The bank said industry growth in Malaysia was comprehensive.

“Manufacturing growth was driven by machinery and equipment and by E&E products, while infrastructure projects brought significant expansion in construction.”

Meanwhile, ADB said growth in the larger Southeast Asian economies had surpassed expectations in the third quarter of this year, benefitting from rising investment and exports.

Most now have upgraded growth forecasts, with the sub-region projected to expand by 5.2 per cent in both 2017 and 2018.

Apart from Malaysia, growth forecasts are revised upwards for Brunei, the Philippines, Singapore, Thailand and Vietnam.

On inflation, ADB said inflation in Malaysia is expected to slow to 2.7 per cent in 2018, unchanged from September, as domestic price pressures subside.

Headline inflation climbed to 4.0 per cent in the first 10 months of 2017 from 2.2 per cent in the same period last year, largely because of a one-off adjustment to fuel prices affecting transport in the first half of 2017 and, in the second half, the pass-through of rising international fuel prices.

Food price inflation year on year to October was also notable at 4.0 per cent.

The inflation forecast for 2017 is revised up to 4.0 per cent from 3.7 per cent earlier in September.

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