KUALA LUMPUR (Oct 18): Private consumption will continue to be a major source of Malaysia's economic growth and is expected to expand at an annual average rate of 7% with the share to gross domestic product (GDP) reaching 56.9% in 2020.

This growth target of 7% is based on the expected favourable labour market conditions and continued growth of income levels.

According to the Mid-Term Review of the 11th Malaysia Plan (2016-2020) released today, the average growth of real private consumption target has been revised slightly higher at 6.8% for the five years compared with 6.4% initially.

In the past two years, private consumption remained a mainstay of the domestic economy with an average growth of 6.5% and the share to GDP increased to 53.7% in 2017, driven by favourable labour market conditions and wage growth as well as other income-supporting measures including bigger cash transfers, double annual increment in civil servants' salaries and reduction in personal income tax.

In addition, the revision of the monthly minimum wage to RM1,000 in Peninsular Malaysia and RM920 in Sabah and Sarawak had also contributed to the strong growth in private consumption.