Nevertheless, the government expects the economy will grow 5% to 5.5% in 2014, up from the projected 4.5% to 5% this year.

“For the Malaysian economy, the gradual recovery in the external sector will support growth,” the central bank said. “Domestic demand from the private sector will remain supportive of economic activity amid the continued consolidation of the public sector. The economy is therefore expected to remain on its steady growth trajectory.”

The iShares MSCI Malaysia ETF (NYSEArca: EWM) has gained 3.3% over the past three months and is up 5.5% year-to-date.

For more information on Malaysia, visit our Malaysia category.

Max Chen contributed to this article.