The Malaysian economy in 2018 is estimated to grow between 5% and 5.5% from 2017, according to the Finance Ministry's real gross domestic product (GDP) estimates for the country.

The ministry said in its Economic Report 2017/2018 that domestic demand is expected to grow 5.5%, driven mainly by private sector expenditure and by resilient domestic demand amid a favourable external sector.

"The Malaysian economy will remain on its growth trajectory in 2018 propelled by domestic demand and supported by the external sector," the finance ministry report said. 

"In addition to positioning Malaysia as the destination of choice for foreign investment, the 2018 Budget will focus on domestic investment to stimulate growth."

The economy grew 5.8% in the second quarter of this year, its fastest pace in more than two years, aided by exports. Shipments of electric and electronic products account for about one-third of third largest Southeast Asian economy's gross exports.

"Private sector expenditure is projected to remain vibrant, expanding by 7.3%," the Ministry announced this morning, ahead of the Budget 2018 speech.

The Ministry said private sector expenditure is forecasted to contribute 72.9% to GDP, helped by private investment and consumption growth at 8.9% and 6.8% respectively.

Government spending is, however, expected to drop. It said public sector expenditure is expected to decline 0.4% as public investment is projected to contract 3.1% on public corporations' lower capital outlays.

Export growth is expected to moderate after to 3.4% in 2018 from an estimated 16.6% increase in 2017. The pace of annual growth in import will also likely moderate to 3.5% in 2018 from this year's estimated 17.8% increase

On the supply side, the Ministry said it expects all major sectors of the economy to register growth. The list comprises the services, manufacturing, agriculture, mining and construction sectors.

"The services sector is projected to grow 5.8%, increasing its share to 54.8% of GDP," the Ministry said.

The Ministry said its 2017 GDP growth forecast for the country is between 5.2% and 5.7%.

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