Malaysia's economy is forecast to expand 4.8 per cent in 2013, driven by investment and improving regional demand, according to Moody's Analytics.
It said Malaysia's export-led economy slowed in the third quarter.
It said fiscal austerity across Europe and a lacklustre US recovery had had a negative spillover effect on global growth, weighing on Malaysian exports.
On a year-ago basis, it said nominal exports contracted two per cent in the third quarter, following the second stanza's four per cent gain.
It said partly offsetting weakness abroad has been the robust domestic investment. The government's drive to improve and develop infrastructure and a steady flow of foreign capital in the first half of the year have also been major catalysts.
This has also supported the broader economy, including the labour market, with a positive effect on household spending. Monthly lending and production data suggests the domestic economy is still expanding.