Malaysia Economic Forecast

Malaysia Economic Outlook

November 14, 2017

Economic momentum remained robust in Q3 as confirmed by more complete data. Export growth expanded by a double-digit pace in September, underscoring thriving external demand for Malaysian goods. Household spending was buoyed by a low unemployment rate in September and by higher wages, which were propped up by a thriving manufacturing sector, the key driver of industrial production growth in the quarter. The 2018 budget passed on 27 October is focused on fiscal consolidation and is expected to narrow the fiscal deficit from 3.0% in 2017 to 2.8% in 2018. Despite the tightening, the budget has consumer-friendly components that will increase disposable income. These include lower income tax rates, especially for middle-income earners; higher public wages; and increased assistance spending. Such policies also point to Premier Najib Razak’s efforts to secure voter support ahead of the 2018 elections.

Malaysia Economic Growth

The current economic expansion is expected to remain robust this year and next. Economic growth should broaden as contributions from the external sector gain traction, while domestic demand is expected to be propelled by vibrant private consumption and higher investment spending. Nonetheless, the economy is susceptible to external shocks such as a global slowdown or regional geopolitical tensions. FocusEconomics Consensus Forecast panelists expect GDP to expand a healthy 4.9% in 2018, which is up 0.1 percentage points from last month’s forecast. For 2019, the panel foresees the economy growing at a pace of 4.6%.

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Malaysia Facts

Bond Yield3.950.15 %Dec 06
Exchange Rate4.080.0 %Dec 06
Stock Market1,718-0.29 %Dec 06

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