The Malaysian economy is set to expand at a steady pace in 2013, supported by strong domestic demand and an improvement in the external sector, but rising inflation pressures and the global slowdown could weaken the pace of growth, the central bank said Wednesday.
The central bank's annual report said that the economy is expected to grow between 5 percent and 6 percent this year, helped mainly by the continued resilience of the domestic sector and investments by the external-oriented businesses.
However, the challenging external environment, primarily the potential re-emergence of instability in the euro area and slower growth in Malaysia's trading partners, continues to pose risks to the economic outlook.
With growth prospects anchored firmly on the strength of fundamentals, the economy is also expected to benefit from robust private investment, driven by capacity expansion by the domestic-oriented firms and the continued implementation of long-term projects.
Growth in merchandise exports is forecast to accelerate this year, reflecting the improvement in external demand. Meanwhile, with imports projected to record a faster growth than exports, the current account surplus would narrow further this year.
The central bank forecasts that Malaysia's headline inflation will average 2-3 percent in 2013, with the wide forecast range reflecting the greater uncertainty in the external and domestic environment.
At the same time, conditions in the labor market are predicted to remain favorable during the year, and the unemployment rate is seen staying low at 3.1 percent.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.