KUALA LUMPUR, Dec 19 — Malaysia is still enjoying strong economic growth and has a robust economy even amid an uncertain global environment, a World Bank official said today.

World Bank Group’s South-east Asia country director Dr Ulrich Zachau attributed the strength of Malaysia’s economy to the country’s "fundamentally strong” and good economic policies, as well as the government’s continued policy to control its spending to bring down the budget deficit.

"The Malaysian economy today is growing at forecast 4.2 per cent this year and a little bit higher next year. In global context, where growth has been declining and all these uncertainties, this really means that the Malaysian economy is continuing to be robust.

"To you, 4.2 per cent may not sound that high, but in the global context, in this environment, it’s actually robust, it’s quite strong,” he said in his opening remarks at the launch of the World Bank’s 15th Malaysia Economic Monitor report titled "The Quest for Productivity Growth.”

He said the Malaysian government is expected to achieve its target of cutting down its budget deficit to 3.1 per cent this year and is projected to cut it down to three per cent next year.

Besides having such economic policies that are supportive of continued robust economic growth for Malaysia, he noted that the continued flexibility of the ringgit’s exchange rate allows for adaptability if global uncertainties continue.

He had referred to various uncertainties in the global environment due to factors such as the UK’s "Brexit” referendum on whether to remain in the European Union, the recent US presidential election and China’s recalibration of its development.

Malaysia had in the past few years experienced strong annual economic growth, with 5.5 per cent in 2012, 4.7 per cent in 2013, six and five per cent respectively in 2014 and last year, World Bank’s biannual report released today showed.

In the same report, the World Bank said the projected slowing down of Malaysia’s economic growth rate to 4.2 per cent this year showed subdued external demand, but said various policies such as cash transfers, reduced contributions to the Employees’ Provident Fund, a hike in minimum wage and salaries for civil servants have helped support private consumption and contributed to growth.

The World Bank’s report also said the country’s annual economic growth is expected to rebound modestly to 4.3 per cent next year and 4.5 per cent in 2018, as global commodity prices are expected to rise again.

It predicted the global economic growth to fall to 2.4 per cent this year before picking up to rise to 2.8 per cent next year.

Minister Datuk Abdul Rahman Dahlan, who is in charge of the Economic Planning Unit, similarly noted in a speech later today that Malaysia’s economy is still resilient despite current uncertainties in the global economy.

"The country is facing the global economic slowdown from a point of strength, not weakness, that was built over the years. We have diversified our economy, maintained healthy trade and current account surpluses, strengthened our banking system and developed our financial markets,” he said.

Today, Zachau also said Malaysia should focus on enhancing productivity levels as it will affect the long-term sustainable growth of the Malaysian economy.

He said Malaysia should use all resources well by tapping into the potential contribution of women to boost productivity, besides also developing the skills set of the workforce, while also raising the role of competition in spurring productivity.

"What is a good approach for exposing government-linked companies to more competition? And this will help drive efficiency and effectiveness of government-linked companies and it may also reduce crowding out,” he said.

Abdul Rahman said there was a need for Malaysia to become a knowledge-driven economy for greater productivity as the economy remained reliant on traditional growth drivers, noting that Malaysia’s productivity growth remains relatively slow when compared to other countries.

He highlighted that Malaysia’s labour productivity level in 2015 was only 37 per cent of the US’s and 54 per cent of South Korea’s, while Malaysia remained at the 47th spot in terms of productivity out of 124 economies.

He added that the government is introducing initiatives at the national, industry and enterprise levels to push for significant improvements in productivity.