KUALA LUMPUR (Oct 21): Malaysia's domestic demand is expected to expand 4.9% in 2017 from a year earlier, mainly on private-sector spending as government spending slows.

According to the Finance Ministry's 2016/2017 Economic Report, private sector spending is expected to increase 6.2% on higher consumption and investment. Private consumption and investment growth are estimated at 6.3% and 5.8% respectively.

Public sector spending growth is seen at 0.6% as government consumption and investment are projected to rise 0.4% and 1.1% respectively.

In 2016, domestic demand was forecasted to rise 4.7%. Private and public sector spending growth were seen at 5.9% and 0.8% respectively.

"Domestic demand will remain as the key driver of growth in 2016, expanding steadily by 4.7% mainly attributed to private sector spending, which is expected to increase by 5.9%.

"With both household consumption and total investment remaining resilient, the GDP is estimated to expand between 4% and 4.5% in 2016," the ministry said.

The ministry said private consumption, which contributed 53.3% to GDP, was seen to be supported by stable employment and income growth.

According to the ministry, government measures including middle-income group tax relief and reduction in workers' Employees Provident Fund contribution are expected to provide impetus to consumption.

The ministry said private investment would remain resilient in a favourable business climate as the Government had implemented pro-business initiatives.

"Strong private sector activity leads growth," the ministry said.