The World Bank expects Malaysia's current account surplus to narrow further this year to 2.1 percent of gross domestic product (GDP) from three percent last year.

"This is based on reduction in commodity balance on export of commodity due to low commodity prices compared to last year," Senior Country Economist, Malaysia, Rafael Munoz Moreno, told reporters after the launch of the Malaysian Economic Monitor (MEM) report in Kuala Lumpur today.

Moreno said the projected decline in the current account surplus was due to the increase in imports because of substantial investments seen in the country.

However, exports in the manufacturing sector helped to mitigate the decline, he said.

Earlier, Moreno gave a presentation on MEM report, titled 'Implementing Trade Agreements'.

Lower commodity prices

During his presentation, he said the current account surplus had narrowed to 3 percent last year from 4.4 percent in 2014, reflecting the lower trade surplus following lower commodity prices and a higher deficit in services.

The current account surplus further narrowed to 1.7 percent of the GDP in the first quarter of 2016 due to higher net payments for construction and telecommunications services.

It was reported that Malaysia's current account surplus in the first quarter of this year fell to RM5.04 billion, dragged down by a lower goods-account surplus and a higher services-account deficit.

Asked whether the United Kingdom's decision to exit the European Union after having joined the trading bloc in 1973 would affect the Malaysian economy, Moreno said: "The World Bank will continue monitoring the global economic situation that will influence the Malaysian economy and its growth projection".

At this moment, he said, the World Bank's projection for Malaysia's GDP at 4.4 percent for 2016 remains intact.

"We are also not considering a recession for the global economy due to this. Our projection for global growth for this year has been revised to 2.4 percent from 2.9 percent," he said.

- Bernama