Malaysia's economy grew a solid 5.1 per cent in the fourth quarter of last year as exports picked up, the central bank says, as economists said rising inflation remained manageable.
Southeast Asia's third-largest economy expanded 4.7 per cent for the full year, down from 5.6 per cent for 2012 but in line with the government's forecast, Bank Negara said in a press release.
Fourth-quarter growth was "supported by private sector demand and improvement in exports", it said, adding that growth was expected to stay on a "steady trajectory".
Exports rose 2.4 per cent in 2013 year-on-year, picking up in the second half due to demand from Malaysia's neighbours, as well as its largest trading partner, China.
But following the government's moves since September to cut fuel, sugar and other subsidies, which cost it billions and have led to a high debt, complaints of the rising cost of living have grown.
"While domestic demand is expected to moderate following the ongoing fiscal consolidation, the external sector is expected to benefit from the improving global conditions," Bank Negara said.
Inflation stood at 3.2 per cent in December compared with the same month a year earlier. For all of last year it stood at 2.1 per cent compared with 2012.
Jeff Ng, a Singapore-based economist with Standard Chartered Bank, said inflation remained among the lowest in the region though it was expected to increase to 3.4 per cent this year.
"Cost is now an issue. But inflation still remains pretty manageable," he told AFP.
Thousands protested in a rally on New Year's Eve against the price hikes.
Prime Minister Najib Razak, whose 57-year ruling coalition was re-elected in May with reduced support, has said cutting subsidies was "necessary" and low-income earners would continue to receive handouts.
Malaysia has one of Asia's highest debt-to-GDP ratios.
Malaysian critics say the government is mismanaging the economy and has failed in its pledge to fight endemic corruption.
