The Malaysian economy grew robustly in2011, outperforming forecasts. Growth was driven by domesticdemand. Public consumption picked up more than expectedtoward the end of the year and fixed investment was alsobuoyant on higher investments by public and privatecompanies. Private consumption spending remained strong,sustained by solid consumer credit, civil service bonuspayments, and firm commodity prices benefiting smallholders.Inventories were a drag on growth as post- financial crisisrestocking was completed. There is momentum to the reformagenda, but implementation could be accelerated. Thegovernment's transformation programs registered notableprogress, but the challenge now is to go beyond quick winsand accelerate the implementation of more difficult, butcritical, structural reforms that lie at the core oftransforming the economy into a high-income one.Implementation can be assisted by increasing thecoordination of related reform efforts (such as safety netsand education), building capacity within the civil serviceto lead reforms, and working towards consensus in key areassuch as educational reform, subsidy rationalization andbroadening the tax base.
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