KUALA LUMPUR, Feb 18— The Malaysian economy which recorded growth of 5.0% in 2015, is expected to face a challenging operating environment in the immediate future, said Bank Negara Malaysia (BNM).
“The downside risks to growth will, however, remain, given the continued uncertainty in the external environment and the ongoing reforms in the domestic economy,” the central bank said in a statement here today.
Though domestic demand will still drive growth with some support from net exports, it said, the pace of domestic demand expansion would be moderate.
It said growth in income and employment would continue to support private consumption, though moderate, as households continue to adjust to the higher cost of living.
Meanwhile, private investment is projected to moderate to below its long-term trend, but will nevertheless be supported by the capital expenditure in the manufacturing and services sectors, as well as implementation of infrastructure projects.
On the global front, BNM said the downside risks to its outlook remained elevated.
This is reflected in the re-emergence of heightened volatility in the financial markets in the early weeks of 2016, following concerns over the growth prospects of the major economies, the fall in energy prices and the global policy shifts.
Going forward, although the global economy is projected to expand further, it said growth was expected to be moderate and uneven.
The pace of recovery will remain modest in major advanced economies while growth is expected to be slow in Asia with continued support from domestic demand, it added.