KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK) - The Malaysian economy is expected to expand at a stronger pace of between 5 per cent and 5.5 per cent in 2014.
"Domestic demand is expected to remain strong and to continue to be the driver of growth," said the government's annual economic report, released just ahead of prime minister Datuk Seri Najib Razak's announcement of Budget 2014 on Friday.
The Government expects private investments to continue recording double-digit growth, supported by accelerated implementation of ongoing Economic Transformation (ETP) projects.
"Given the improved external outlook and measures outlined in Budget 2014 to boost exports, investments in export-oriented manufacturing and services industries, as well as agro-based industry are expected to increase," it stated.
Public investment will largely be sustained by capital outlays of Non-Financial Public Enterprises (NFPEs) in the oil and gas, utilities, transport and telecommunications sectors.
Private consumption will remain resilient, supported by higher household income and stable labour conditions.
On the supply side, the services and manufacturing sectors are expected to expand at a stronger pace on the back of resilient domestic consumption, higher tourist arrivals from Visit Malaysia Year 2014, and a firmer recovery in external demand, especially in electrical and electronics products.
The services sector - which accounts for 55 per cent of the country's GDP - is expected to show a dip to 5.5 per cent in 2013 from 6.4 per cent in 2012, before picking up to grow at 5.7 per cent in 2014.
As for the manufacturing sector - which accounts for 24 per cent of GDP - it is expected to slow down to 3.2 per cent in 2013 from 4.8 per cent in 2012 before recovering to grow at a faster pace of 3.8 per cent in 2014.
The construction sector is also likely to continue performing well, driven by civil engineering projects and the residential segments. But growth is expected to decline from 18.1 per cent in 2012 to 10.6 per cent in 2013 and to 9.6 per cent in 2014.
Gross National Income (GNI) is expected to increase 6.2 per cent to RM34,126 (S$13,354) in 2014 from RM32,144 in 2013. Per capita income is estimated to grow to US$17,173 (S$21,238) from US$16,743.