KUALA LUMPUR (Jan 22): The International Monetary Fund (IMF) has tweaked its 2016 gross domestic product forecast for Malaysia to 4.4%, from 4.5% earlier, owing to the confluence of factors that included the global and regional trade slowdowns.

In a statement published on the global monetary organisation's website, the IMF said that Malaysia's economy continues to perform well, although growth has slowed down and downside risks predominate.

"The external environment for 2016 is shrouded in uncertainties: China spillovers, the continued strength of the US dollar and the uneven strength of activity in Malaysia's other trading partners.

"Economic growth should remain solid in 2016, edging down to around 4.4% from an estimated 4.8% in 2015. Activity should be underpinned by healthy, albeit moderating, domestic demand but constrained by weak external demand. Credit growth is expected to slow down, dampening the accumulation of debt, but financial conditions are expected to remain supportive of growth," the IMF said.

It added that credit growth is expected to slow down, dampening the accumulation of debt, although financial conditions are expected to remain supportive of growth.

Consumption growth, meanwhile, will be supported by high rates of household formation, strong employment and expanded federal transfers to lower income groups.

"Inflation should rise temporarily as the impact of lower oil prices wanes and a more depreciated exchange rate passes through to price," the IMF added.

An IMF team had recently visited Kuala Lumpur to conduct discussions with senior government and Bank Negara Malaysia officials.

The Edge Financial Daily had on Dec 7, 2015 quoted IMF's deputy managing director Mitsuhiro Furusawa as saying that the IMF projected the Malaysian economy to grow by 4.5% in 2016.