KUALA LUMPUR: Malaysia's gross domestic product (GDP) is expected to grow five per cent this year and the sustainability of the country's economy continues to gain international firm confidence, OCBC Bank said.
Chief economist Selena Ling, said private consumption is expected to remain strong in 2018 following continued government revenue-supporting measures, lower income tax rates and increased sentiment.
"Private investment will also increase due to rising demand and external sentiments," he said, announcing the 2018 Economic Outlook, in Kuala Lumpur.
She said the GDP 2018 growth was projected to be moderate and lower than the 2017 projection of 5.8 per cent, given the high base last year as well as slower growth in trading partner economics.
"However, it still shows positive momentum supported by several factors, including investment spending, trade and high oil prices," she said.
Ling said inflation rate in Malaysia is also expected to moderate in 2018 compared to other Asian counterparts and Malaysia needs to be more cautious about any signs of increase following the increase in household debt.
Fiscal deficit is projected to fall to 2.9 per cent this year compared to 3.0 per cent in 2017.
"It is driven by stable oil prices and encouraging economic growth.
"The world oil market has shown a significant recovery this year and the commodity price is projected to increase from US$65 to US$70 per barrel by 2018," she said.
At the same time, the background of fiscal spending from the previous budget was also expected to strengthen consumer and investor confidence this year.
Commenting on the ringgit, Ling said, the local currency is projected to be stronger against the US dollar and to stand at RM3.7636 by December 2018.
"We expect the ringgit to strengthen against the dollar supported by the policy implemented by the central bank, but compared to other countries it is quite limited," she said.