KUALA LUMPUR, March 28 (Xinhua) -- The Malaysian economy is projected to grow by 5 percent to 6 percent this year, mainly underpinned by strong domestic demand and exports, said Malaysian Central Bank's governor Muhammad Ibrahim Wednesday.

He told a press conference in conjunction with the release of Bank Negara Malaysia annual report 2017, the growth will still be mainly driven by domestic demand, underpinned by private sector activity.

The country would also benefit from exports as the International Monetary Fund had earlier lifted the global growth forecast to 3.9 percent, he added.

"This year will be a good year provided there is no trade war and unforeseen volatility and surprises from the normalization of monetary policy," he said.

Malaysia's economy grew at 5.9 percent last year.

According to Muhammad, private consumption and investment this year is expected to sustain at 7.2 and 9.1 percent respectively this year.

Meanwhile, all sectors are projected to expand in 2018, with services and manufacturing remain the key drivers to overall growth, growing at 6.1 and 5.9 percent respectively.

Amid further strengthening in the global economy, the country's gross exports is projected to grow at 8.4 percent this year.

On the impacts of potential trade war, Muhammad said, Malaysia's economy is more resilient today as it is diversified in terms of trading partners, and products and services, following its reforms in the past years.

"However, any trade protectionism measure will affect all economies as the world is highly open and more globalized," he said, adding that it is important for all countries to avoid a trade war.

Meanwhile, the central bank expects Malaysia's inflation to be lower at 2 percent to 3 percent this year, from 3.7 percent last year.

The lower inflation compared to 2017, is due mainly to an expected smaller contribution from global energy and commodity prices.

A stronger ringgit exchange rate compared to last year would also mitigate import costs, according to Muhammad.

Malaysia will also continue to strengthen its fiscal position by narrowing the federal government's fiscal deficit further to 2.8 percent of its gross domestic product this year, supported by higher revenue growth.?