“The first quarter private consumption growth of 5.3% came as a surprise,” said Heise at a press conference today, adding that in April, loans growth decelerated for the 8th consecutive month to 6.3%.

Heise, who advises the Allianz SE board on economic and strategic issues, said private consumption locally was expected to moderate this year to 4.5-5% from 6-7% in 2014-2015.

“Headwinds come from the challenging external conditions, both in terms of foreign trade and capital flows,” Heise said.

Allianz Economic Research expects Malaysia’s real GDP to grow by 4.2% this year compared with last year’s 5.0%.

At the same time, the Malaysian insurance market is expected to maintain last decade’s pace in growth with an average 7% per year over the next 10 years.

“With average per capita spending of RM1,800 and insurance premiums amounting to 4.7 per cent of GDP, Malaysia is one of the more developed Asian insurance markets,” Heise said.

“A wide-ranging policy agenda is needed to harness the huge potential of emerging Asia.

“Priorities should include structural reforms to increase productivity and growth potential, but also policies to manage risks associated with high leverage and financial volatility.”

2015 displayed a total insurance market growth (excluding health) of 4.6%, markedly below the 10-year average of 6.8%.