KUALA LUMPUR: PRIVATE consumption will continue to sustain Malaysia’s economic growth amid the challenging global environment, said the World Bank Group. Its senior economist of Malaysia, East Asia and Pacific, Dr Rafael Muñoz Moreno, said this was a trend unique toMalaysia and other emerging markets and developing economies (EMDE).

In this period of low economic growth, private consumption, especially within the services segment, will continue to drive the economy as the percentage of trade and investments decreases in EMDE,” he said at the Affin Hwang Capital Conference Series 2016, here, yesterday.

Malaysia has taken all the right steps in spurring this by increasing the minimum wage and lowering the Employees Provident Fund contribution from 11 to eight per cent,” he said.

He later told Business Times that the trend of private consumption being the main growth driver was expected to continue as long as global commodity prices remained low.

He said there was no time frame how long private consumption would drive growth.

“Malaysia is on a stable footing because it is a services segment-heavy economy and most private consumption comes from the services segment.”

The World Bank also expects EMDE’s collective gross domestic product (GDP)to grow at 3.5 per cent this year, which is lower than the initial forecast but still higher than a dvance economies’ collective GDP growth at 1.7 per cent and global GDP growth at 2.4 per cent.

According to Moreno, the biggest concern for World Bank right now is EMDE’s inability to catch up with the United States income level, even as these economies increasingly became more developed.

“This is a big problem as the wages in EMDE can’t match or come close to that in the US. The poor won’t be able to survive in a more expensive environment and this will consequently push them into poverty.

“One of the key objectives of World Bank is poverty eradication, so this trend is a big concern for us,” he added.

International Trade and Industry Minister Datuk Seri Mustapa Mo hamed earlier officiated at the conference.

“Despite some hiccups in the integration of Asean, especially within the areas of trade agreements and transportation of goods across borders, we remain very bullish of the region’s prospects.

“In Malaysia, we are still seeing a steady flow of foreign direct investments and we hope to have some RM30 billion worth of investments finalised and approved by the end of the year,” said Mustapa.