Malaysia’s economy will grow by 5.4 percent in 2014 and 4.6 percent next year, as exports have improved and the tightened fiscal and monetary policies have taken effect, the World Bank (WB) has said.

In its annual Economic Monitor report, the WB said exports, the backbone of the Malaysian economy, will increase 6.3 percent this year and 6.2 percent in 2015, due to rising global demand for the country’s key goods such as oil and gas and electronic products.

The bank lauded the Malaysian Government for its subsidy rationalisation programme, especially new fuel subsidy for the poor.

Minister in the Malaysian Prime Minister’s Department Datuk Seri Abdul Wahid Omar said the Government spent some 23.5 billion RM (7.31 billion USD) in fuel subsidy, bringing the cumulative total to 136 billion RM (42.33 billion USD) over the past 14 years.

The report said that high levels of household debt were a risk to growth. Household debts in Malaysia climbed to 86.5 percent of its GDP in 2013, among the highest in Asia.

The central bank of Malaysia is expected to begin raising interest rates in July for the first time in three years, partly due to financial imbalances such as consumer indebtedness. Currently, the benchmark interest rate imposed by the bank is 3 percent.

Regarding investments, the bank said improved global economy and the approval of the over-400-hectare Pengerang Integrated Complex will result in higher investment inflow as well as growth in capital goods imports.-VNA