Malaysia Economic Forecast

Malaysia Economic Outlook

August 25, 2020

The economy nosedived in the second quarter, recording the worst contraction on record and performing last among its regional peers. A strict lockdown decimated the domestic economy, causing both fixed investment and private consumption to fall at a record pace. Turning to Q3, the manufacturing PMI fell slightly in July, but still remained well above the readings at the height of the lockdown, suggesting that a recovery is under way. Moreover, the reopening of the border with Singapore in August bodes well for tourism and cash flows, as many Malaysians commute to work in Singapore. On 18 August, the government struck a USD 3.9 billion settlement deal with Goldman Sachs to resolve allegations linked to the 1MDB scandal. The deal will provide a much-needed, large cash payment to the government, and help ease its debt burden at a critical time as it tries to stoke an economic recovery.

Malaysia Economic Growth

The economy is seen contracting at the sharpest pace since 1998 this year, hammered by containment measures due to the Covid-19 pandemic, and low oil prices. Risks to the outlook are tilted to the downside and include a slow recovery in key trading partners, a second round of lockdowns, volatile commodity prices and political turbulence—including snap elections. FocusEconomics panelists see the economy contracting 4.2% in 2020, which is down 0.8 percentage points from last month’s forecast, before rebounding and growing 5.8% in 2021.

Malaysia Economy Data

2015 2016 2017 2018 2019
Population (million)31.231.632.032.432.8
GDP per capita (USD)9,7249,5789,95211,07211,091
GDP (USD bn)303303319359364
Economic Growth (GDP, annual variation in %)5.14.45.84.84.3
Consumption (annual variation in %)6.05.96.98.07.6
Investment (annual variation in %)3.62.66.11.4-2.1
Industrial Production (annual variation in %)2.54.14.43.12.3
Unemployment Rate3.13.53.33.33.3
Fiscal Balance (% of GDP)-3.2-3.1-2.9-3.7-3.4
Public Debt (% of GDP)53.651.950.151.252.5
Money (annual variation in %)3.33.25.18.93.5
Inflation Rate (CPI, annual variation in %, eop)2.71.73.50.21.0
Inflation Rate (CPI, annual variation in %)2.12.13.81.00.7
Inflation (PPI, annual variation in %)-7.5-1.16.7-1.1-1.4
Policy Interest Rate (%)3.253.003.003.253.00
Stock Market (annual variation in %)-1.3-6.40.211.8-9.9
Exchange Rate (vs USD)4.294.494.054.134.09
Exchange Rate (vs USD, aop)3.914.144.304.044.14
Current Account (% of GDP)3.02.42.82.23.4
Current Account Balance (USD bn)9.17.28.98.012.3
Trade Balance (USD billion)23.221.223.030.733.2
Exports (USD billion)199190218249238
Imports (USD billion)176168195218205
Exports (annual variation in %)-14.9-4.914.814.3-4.2
Imports (annual variation in %)-15.7-4.415.612.0-5.9
International Reserves (USD)95.394.5102101104
External Debt (% of GDP)64.367.368.662.363.5

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Malaysia Facts

Value Change Date
Bond Yield3.320.15 %Dec 31
Exchange Rate4.090.0 %Jan 01

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