Malaysia’s economic growth expandedstrongly in first quarter (1Q) 2017. Gross domestic product(GDP) growth rate for 2017 is expected to accelerate to 4.9percent, slightly above the government’s current projectionrange of 4.3 to 4.8 percent. The current account surplus hasdeclined (1Q 2017: 1.6 percent of GDP; 4Q 2016: 3.8 percentof GDP) due to strong import growth. Gross imports growth,mainly of capital and intermediate goods, outpaced thesignificant increase in gross exports, resulting in a lowergoods surplus. The current account surplus is projected tonarrow further to 1.6 percent of GDP in 2017. Monetarypolicy is expected to remain accommodative and supportivefor growth. The higher growth trajectory projected for 2017opens up room to accelerate reduction in the fiscal deficit.Risks to the economy in the short-term stem mainly fromexternal developments. Focus on implementing furtherstructural reforms to raise the level of potential growthshould continue. This include looking into measures to raisethe level of productivity, encourage innovation, invest innew skills, leverage digital technologies, and continueongoing efforts to improve efficiency of public service delivery.