KUALA LUMPUR, March 31 (Xinhua) -- The World Bank on Friday projected the Malaysian economy to grow at a more moderate pace of 4.3 percent in 2023 supported by domestic demand amid an expected slowdown in external demand.

Private consumption growth is forecast to remain robust, albeit at a slower rate at 6.3 percent in 2023, as compared to 11.3 percent in 2022, the World Bank said in a report.

According to the report, private consumption growth is supported by improvements in labor market conditions, as well as ongoing income support measures from the government.

Meanwhile, investment is projected to increase by 4.4 percent in 2023, as compared to 6.8 percent in 2022, reflecting the continued flows of capital investments in the private and public sectors.

Malaysia's inflation, on the other hand, is forecast to moderate to between 2.5 and 3.0 percent in 2023, as compared to 3.3 percent in 2022, as global supply constraints ease, and commodity prices stabilize.

The World Bank said as a highly open economy, Malaysia will continue to face substantial risks emanating from the external environment, which includes tighter global financial conditions, deeper slowdown in major economies, and so on.

On the domestic front, it said the main sources of downside risk relate to the uncertainty surrounding inflation and relatively high debt levels, which could weigh more heavily on domestic demand.

Going forward, it said poor and vulnerable households who are most affected by the COVID-19 pandemic may take longer to recover, reinforcing the need for effective and targeted social protection programs in Malaysia.

"The government's plan to update its poverty line income and multidimensional poverty index is therefore both timely and important to ensure the measures are commensurate with Malaysia's current living standards," it said.