KUALA LUMPUR, March 19 ― Malaysia's economy is expected to grow between 4.5 and 5.5 per cent this year, compared with 4.7 per cent in 2013, with construction and services to contribute the bulk of the growth.

The construction sector is likely to register a growth of 10 per cent this year from 10.9 per cent in 2013, followed by services 6.2 per cent (2013: 5.9), Bank Negara Malaysia (BNM)said in its 2013 annual report released today.

The central bank said that the agriculture, forestry and fishery sectors would grow at 3.8 per cent (2013:2.1), followed by manufacturing 3.5 per cent (2013:3.4).

Resource-based industries and services were important sectors to advance the country's goal of becoming a high income nation by 2020. “Even now, there is substantial evidence that Malaysia is already progressing in the right direction,” Bank Negara said.

“Several manufacturers in the resource-based industries have moved into producing higher value-added products such as nitrile-based gloves for the healthcare industry.

“In terms of resource-based services, the rise in transshipment activities has been reflected in the sharp 44 per cent year-on-year rise in re-exports in 2012 and a further 40 per cent in 2013,” it added.

BNM said this would contribute towards further improving the country's fundamentals by creating higher value-added activities and by diversifying the sources of growth in the economy.

In another development, the central bank said the expanded role of its regional offices (ROs) reflects the importance of broadening and deepening the surveillance process to complement its macroeconomic surveillance.

It said the planned expansion of its branches in Kuching and Kota Kinabalu to become ROs in 2014 was part of the process.

In 2013, the Malaysian economy expanded by 4.7 per cent compared with 5.6 per cent in 2012, driven by the continued strong growth in domestic demand.

BNM said despite the weaker external environment in the first half of the year, domestic demand remained resilient throughout the year, led by robust private sector activity.

Domestic demand expanded by 7.6 per cent in 2013 compared with 10.6 per cent in 2012, due to the robust growth in private consumption (7.8 per cent) and investment (13.6 per cent).

“Public expenditure growth moderated but remained supportive of overall growth,” the central bank said.

The current account registered a smaller surplus of RM37.3 billion, or 3.9 per cent of gross national income compared with RM57.3 billion or 6.3 per cent in 2012.

External debt amounted to RM318.1 billion as at end-2013 compared with RM252.8 billion in 2012.

Headline inflation, as measured by the annual percentage change in the Consumer Price Index (CPI), remained modest at 2.1 per cent in 2013 compared to 1.6 per cent in 2012.

The annual inflation rate averaged at the lower end of the BNM's earlier forecast of two per cent to three per cent. ― Bernama