KUALA LUMPUR (Dec 14): The World Bank upgraded its Malaysia 2017 gross domestic product (GDP) growth forecast to 5.8% from 5.2% after taking into account the nation's accelerated economic growth so far this year.

In a statement today, World Bank said Malaysia's accelerated growth has been fueled by strengthening domestic demand and improved labour market conditions. World Bank said wage growth and improved external demand for the country's manufactured products and commodity exports also supported GDP growth.

"Capital expenditure has also increased due to higher private and public investment," World Bank said. World Bank issued its statement in conjunction with the launch of its Malaysian Economic Monitor report here today.

Ulrich Zachau, World Bank Director for Malaysia, Thailand, and Regional Partnerships, said in the statement: "Malaysia's progress over the last 20 years owes much to the sound policies being adopted during and since the Asian Financial Crisis."

According to Bank Negara Malaysia, the country's GDP grew 4.2% in 2016 after expanding 5% in 2015.

At the launch today, Zachau told reporters that World Bank expects Malaysia to continue reporting robust economic growth at above 5% in 2018 and 2019.

He said the country's growing economic prosperity creates opportunities for deeper structural reforms. He said these reforms include measures to increase productivity such as enhancing competition, especially among government-linked companies, and addressing critical skills shortage.

"Although Malaysia may reach its high income goals somewhere between 2020 and 2025, a majority of people will earn less than the average income," Zachau said.