KUALA LUMPUR, March 23 (Reuters) - Malaysia's central bank on Thursday projected that the economy will grow 4.3-4.8 percent this year, more than the 4.2 percent reported for 2016.
The target, if achieved, would reverse two years of slowing growth and provides a boost for Prime Minister Najib Razak, who might call elections as early as the second half of this year.
"With the gradual improvement in global growth, recovery in global commodity prices and the continued growth of domestic demand are expected to collectively support Malaysia's growth performance," Bank Negara Malaysia (BNM) said in its annual report.
The central bank forecast 2017 headline inflation at 3-4 percent, compared with 2.1 percent last year.
It said that for the ringgit currency, "volatile conditions are expected to continue as uncertainties on global growth, global monetary policy and global commodity prices persist".
Policymakers "will continue to focus on ensuring the domestic financial and foreign exchange markets reflect the developments in the Malaysian economy," the central bank said.
The report said government's fiscal deficit expected to narrow to 3 percent of the GDP in 2017 versus 3.1 percent in 2016. (Reporting by Praveen Menon and Joseph Sipalan; Editing by Richard Borsuk)