Malaysian economy continues to record resilient growth despite "external headwinds", a World Bank report said Monday.

In its latest Malaysia Economic Monitor, World Bank said Malaysia's gross domestic product (GDP) growth rate is projected to reach 4.2 percent in 2016 and 4.3 percent in 2017, before rising to 4.5 percent in 2018, as commodity prices recover and the global economy accelerates.

"Malaysia's economic growth has slowed down but remains resilient to external headwinds," said the report.

It pointed out that private consumption would continue driving economic growth, supported by low unemployment, government income-support measures and a reduction in a key policy rate earlier this year.

"Private investment growth is expected to moderate, as commodity prices and global economic activity remain subdued," it said

The report praised the Malaysian government's fiscal consolidation efforts despite lower oil-related revenue, a major contributor to the government's coffer.

World Bank cited external developments as the greatest risk to the country's growth trajectory.

"Uncertainty regarding the impact of potential U.S. fiscal stimulus policies on global trade, energy prices, financial flows and exchange rates is a major source of external risk, as evidenced with the recent financial outflows from emerging markets and its impact on the value of the ringgit," it said.

With a special focus on increasing productivity, the report said rising productivity will become the main engine of economic and income growth for the country in the future, as traditional drivers of growth are expected to moderate, with capital accumulation facing headwinds and labor force growth gradually slowing down as the Malaysian population ages.

The report envisages rising female labor force participation and increasing human capital through skills upgrading as the key drivers of Malaysia's future growth.

source: Xinhua