Bank Negara in May reiterated its target for the Malaysian economy to achieve 4% to 4.5% growth in 2016.

PETALING JAYA: The World Bank expects economic growth in Malaysia to trail expansion in the rest of the region this year, but to pick up pace from 2017 onwards as prices of commmodity stabilise.

“In Malaysia, growth should slow to around 4.4% in 2016, as the economy adjusts to weak commodity prices and public spending cuts due to lower natural resource sector revenues,” the World Bank wrote in its latest Global Economic Prospects report,

“Growth is expected to rebound gradually in 2017-18, as commodity prices stabilise and reforms are implemented to spur investment, which has already showed signs of bottoming out,” it added.

Bank Negara in May reiterated its target for the Malaysian economy to achieve 4% to 4.5% growth in 2016.

The World Bank, meanwhile, is projecting growth in the East Asia and Pacific region, which includes China, to slow to an unrevised 6.3% rate in 2016. China’s expansion is expected to ease to 6.7%.

The region excluding China is projected to growth at 4.8% in 2016, unchanged from 2015.

This outlook assumes an orderly growth slowdown in China accompanied by steady progress on structural reforms and appropriate policy stimulus as needed.

“Growth in the rest of the region is expected to be supported by rising investment in several large economies, in nations like Indonesia, Malaysia and Thailand.

“Meanwhile, strong consumption supported by low commodity prices is expected to occur in Thailand, the Philippines, Vietnam,” it said.

Slowing growth in China is expected to offset a modest pickup in growth among members of Asean this year.

The region is expected to benefit from the strengthening recovery in advanced economies, low energy prices, improved political stability, and continued favorable conditions in global financial markets, despite anticipated monetary policy tightening in the United States.

Among commodity exporters, growth in Indonesia is projected to pick up to 5.1% in 2016 from 4.8%, provided reforms are implemented to encourage investment and boost productivity.

Growth in Thailand is expected to accelerate gradually, but remain below 3% on average in 2016 to 2018 as high household debt holds back consumption and export growth remains lukewarm.

Countries such as Indonesia, Malaysia, and Mongolia would benefit from making further progress in reducing reliance on commodity-related revenues.