Standard Chartered Global Research on Wednesday raised Malaysia's full year gross domestic product (GDP) growth forecast to 5.4 percent, from 4.6 percent.
The research house in a report attributed the upward to the country's much stronger-than-expected first half growth of 5.7 percent.
Two key areas that positively surprised the research housein the first half were the private consumption, which rose close to 7 percent year-on-year, and private investment, that increased 10 percent year-on-year.
"Exports picked up in line with our expectations, although higher imports curtailed the contribution from net exports," it said.
Despite the strong first half economic growth, the research house maintained its view that growth will moderate in the second half.
It expects the private consumption to ease, as the real wage growth which has affected consumption with a lag of about three quarters empirically, was slightly negative in the first half.
Malaysia's loan growth also remains subdued, although private investment was strong in the first half.
On external demand, it said the momentum, especially the robust electronics cycle may keep growth up in the second half, but some base effects may kick in during the fourth quarter.
"On balance, 2017 is shaping up to be a year of rebound after the muted 4.2 percent GDP growth in 2016," it concluded.
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