Bank Negara Malaysia is likely to announce a slower economic growth for the third quarter today, dragged by the weaker exports.
Economists, however, say it will remain healthy against a backdrop of external uncertainties. Domestic demand in Malaysia will continue to offset the weak external demand.
A Business Times poll expects an average 4.75 per cent growth in the GDP for the third quarter (from 5.4 per cent in the second quarter), with whole year outlook of 4.91 per cent, while growth will likely grow at an average 5.01 per cent in 2013.
International Monetary Fund Managing Director Christine Lagarde, who was here on Wednesday, also placed her confidence in the Malaysian economy, saying it is likely to realise its targeted four to five per cent growth this year.
DBS Bank economist Irvin Seah said a strong and resilient domestic demand is holding up the headline growth number.
"While neighbouring Singapore is struggling with a benign growth of about one per cent, Malaysia is performing exceptionally well in this regards," he said.
"Assuming that eurozone does not blow up and the US economy continues to muddle along, while growth momentum in Asia remains fairly healthy, albeit slower, Malaysia's domestic engine should continue to keep the overall economy afloat."
He also argued that even with a slower growth momentum in the second half of the year, the full year GDP growth is still likely to average five per cent for the year, followed by resilient and stable growth in 2013.
Seah described the consumption growth as healthy, with a buoyant labour market as well as the positive wealth effect from a rising property market.
"Investment growth will continue to remain in double-digit pace, driven mainly by the healthy slew of government development projects arising from the Economic Transformation Programme."
However, with the drag from the external front, both consumption and investment growth are likely to be running slightly slower in the third quarter.
"Nonetheless, these will be more than sufficient to offset the drag from weak exports."
But imports will continue to outpace exports on account of the strong domestic demand, he said.
HSBC Bank also expect the robust domestic demand, on both the consumption and investment fronts, to provide some buffer against the negative contribution from net exports.
Given the weak global demand, exports have stayed under pressure and the trade surplus has shrunk from a year ago.
Dr Chua Hak Bin of Bank of America Merrill Lynch said consumer spending probably remained strong on the back of generous government handouts and accommodative monetary conditions.
Investment is being supported by ongoing infrastructure and oil and gas projects, he added.