KUALA LUMPUR, April 24 (Xinhua) -- The World Bank on Wednesday maintained Malaysia's 2019 gross domestic product (GDP) growth forecast at 4.7 percent, but warned of the risks emanating from uncertainty in the external environment and increased fiscal reliance on oil-related proceeds might drag the growth.
The international financial institution said in its April 2019 edition of the World Bank East Asia and Pacific Economic Update, private consumption will continue to be the main driver of Malaysia's growth, albeit expanding at a more measured pace.
"While private consumption remained resilient, weaker export growth and lower public sector investment weighed down growth," it added.
Malaysia's economy grew at 4.7 percent last year. Malaysian Central Bank earlier projected a growth of 4.3-4.8 percent this year.
The World Bank also expects Malaysia's economy to expand at 4.6 percent in 2020 and to achieve high-income country status by 2024.
However, given Malaysia's high degree of trade and financial integration, it said, the ongoing uncertainties surrounding the global trade tensions and shifts in global financial market sentiment could pose downside risks to Malaysia's economy in the near term.
On the domestic front, the bank also noted, the relatively high levels of government liabilities and increased dependency on oil-related proceeds could potentially constrain the flexibility of fiscal adjustment against future macroeconomic shocks.
In the private sector, the relatively high level of household debt remains a source of macro financial stability risk and acts as a constraint on household spending, it added.
On fiscal deficit, the World Bank said, Malaysia's fiscal deficit is expected to narrow to 3.4 percent of GDP in 2019 and subsequently to 3 percent in 2020.
"Near-term fiscal consolidation efforts are expected to be achieved primarily through rigorous expenditure rationalization, with broad-based declines (in percentage of GDP) projected across major components of operating and economic development outlays," said the bank.