The World Bank, however, lowers the growth outlook for 2013 from 5.1 per cent to 4.6 per cent.
THE World Bank has raised its growth outlook for the Malaysian economy from 4.6 per cent to 4.8 per cent in 2012.
However, it lowered the growth outlook for 2013 from 5.1 per cent to 4.6 per cent.
The revised outlook follows the Asian Development Bank which has also changed its Malaysian outlook to 4.6 per cent for 2012.
In April, the World Bank projected Malaysia was likely to grow at 4.6 per cent in 2012 and, assuming global recovery continues, 5.1 per cent in 2013.
In its latest East Asia and Pacific Economic Data Monitor which was released in Singapore yesterday, it said economic growth in the East Asia and Pacific region may slow down to 7.2 per cent this year before recovering to 7.6 per cent in 2013.
The new report says that weak exports and lower investment growth will cut down China's gross domestic product (GDP) growth from 9.2 per cent in 2011 to 7.7 per cent this year.
In 2013, however, China's growth is expected to rebound to 8.1 per cent as the impact of stimulus measures kicks in, supported further by an uptick in global trade.
In a statement, World Bank Group president Jim Yong Kim said the East Asia and Pacific region's share in the global economy has tripled in the last two decades, from 6 per cent to almost 18 per cent today, which underscores the critical importance of this region's continued growth for the rest of the world.
According to the World Bank, export growth for East Asia as a whole slowed to 4.5 per cent in the second quarter, and trade as a whole now no longer contributed to the region's growth.
In contrast to external demand which slowed in all the major economies except China and Vietnam, domestic demand continues to thrive among the large Asean countries.
The report said the reconstruction spending in Thailand after last year's floods were among the factors which have given a boost to domestic demand in the region.
Indonesia, Thailand and Malaysia are currently enjoying a boom in spending by their governments and the private sector on capital goods.
"But more seems to be going on, in particular investment spending in Thailand, Malaysia and Indonesia is booming, and the latter has now reached investment to GDP levels equalling those from before the Asian financial crisis for the first time."
Inflationary pressures are receding across the region with the balance is yet again shifting to concerns on growth while monetary policies have started to adjust.
In Malaysia, it described both expenditures and revenues as considerably higher than planned, with spending on civil service compensation and cash transfers to households leading expenditure increases.
Infrastructure spending on budget grew by a modest 4 per cent, as some of infrastructure spending have been shifted to state enterprises or the private sector, with support of government guarantees.
The recently announced budget for 2013 promises a consolidation of the deficit to 4 per cent of GDP.
On the risks to outlook, the World Bank said although recent policy moves have reduced the risk stemming from the eurozone, financial market disruptions still constitute the main risk to this outlook, followed by the "fiscal cliff" risk in the US.