KUALA LUMPUR: The strong gross domestic product (GDP) achieved by Malaysia in 2014 is very much expected in the light of the government's ability to weather external challenges.

IQI Holdings Sdn Bhd Chief Economist Shan Saeed said the government has done a good job in upholding confidence in the economy with its effective policies.

Malaysia posted a 6.0 per cent GDP growth for the 2014 financial year from the 4.7 per cent achieved in the 2013 financial year. The fourth quarter GDP expanded by 5.8 per cent, driven by private sector spending.

"What I like about Malaysia is that there has always been an economic consistency and the government shows that it is very much in control of the situation.

"I believe the strong GDP trend will continue in 2015 and expect Malaysia to register economic growth of between 5.0 per cent and 5.5 per cent this year," he told Bernama.

He also did not discount the possibility of hiccups along the way given the uncertainty clouding the external market.

Shan expects the Malaysian economy to experience a slight setback in 2017, from the spillover effect of an anticipated economic slowdown in Europe and the United States.

"We believe the negative impact would be very minimal as Malaysia shifts its trade destination focus to within the ASEAN region," he said.

On the interest rate, he expects Bank Negara Malaysia to maintain the overnight policy rate at the current level of 3.25 per cent, at least for the next two quarters.

According to Shan, Malaysia's balance sheet is also very strong with foreign exchange reserves at over US$100 billion (US$1=RM3.60).

He said strong aggregate demand and Malaysia's deep consumption patterns are intact and the country's oil and gas industry is still very healthy.

"Political, financial, economic and infra-structure stability at the macro level is important for foreigners. Foreign investment is also coming from Japan, South Korea and China.

"Real estate investment is coming from China, Pakistan, Bangladesh, the United Kingdom and other European countries," he added. - Bernama