KUALA LUMPUR, Nov 2 ― Malaysia’s gross domestic product (GDP) is estimated to grow at just 4.8 per cent this year, sharply down from last year’s 5.9 per cent and previous estimates.

In its Economic Outlook 2019 released today, Putrajaya also forecast that next year’s economic growth will only be marginally better, at 4.9 per cent.

"The outlook for the Malaysian economy remains resilient in the near term despite considerable external and domestic headwinds,” the government said in the outlook.

Putrajaya said the expansion will mainly be supported by domestic demand, as public spending is expected to only rise slightly in 2018 before receding next year following lower capital spending by public firms.

The services sector will remain the biggest contributor to the economy, while the construction sector will likely moderate from the near completion of infrastructure projects and unsold property, especially non-residential projects.

The growth figure is lower than Bank Negara Malaysia’s last prediction in August, which was already revised then to 5 per cent from between 5.5 and 6.0 per cent, but more optimistic than the Malaysian Institute of Economic Research’s (MIER) prediction last month of 4.7 per cent.

The World Bank had in April projected Malaysia’s 2018 GDP growth at 5.2 per cent, but Prime Minister Tun Dr Mahathir Mohamad said then that he suspected manipulation of the country’s economic data.

Last month in the revised 11th Malaysia Plan, Putrajaya had already cut its annual GDP targets from now until 2020 to an average of between 4.5 and 5.5 per cent, from between 5 and 6 per cent previously.

Inflation is expected to moderate to between 1.5 and 2.5 per cent this year, down from last year’s 3.7 per cent, due to the stabilisation of RON95 petrol and diesel prices as well as the Goods and Services Tax (GST) holiday between June and August.

However, inflation is set to climb to between 2.5 and 3.5 per cent next year due to, among others, the implementation of the Sales and Services Tax (SST).

The unemployment rate is also expected to remain steady at 3.3 per cent this year and the next, marginally down from 3.4 per cent in 2016 and 2017. Anything under 4 per cent counts as full employment in Malaysia.

"Despite the anticipated expansion, uncertainties in the external sector as well as domestic challenges could pose a downside risk to the growth outlook,” the report said.

Finance Minister Lim Guan Eng will table the Pakatan Harapan government’s maiden Budget this evening.

In it, Putrajaya is expected to address public trust in the government, encourage greater entrepreneurship, and ensure the continued well-being of Malaysians.