Malaysia Economic Forecast

Malaysia Economic Outlook

December 13, 2019

The economy cooled to a three-year low in the third quarter as the U.S.-China trade rift and the global tech slump continued to weigh on demand for Malaysian electronic products, causing exports of goods and services to fall in Q3. Moreover, fixed investment declined at the sharpest rate on record, while household spending softened. Turning to Q4, the economy will likely remain sluggish. The manufacturing PMI remained in contractionary territory in November, although the pace of decline moderated, suggesting the downturn appears to have bottomed out in Q3. Moreover, weak tech demand continued to drag on merchandise exports in October. Despite signs of a preliminary U.S.-China trade deal in the near-term, persistent headwinds from the trade tensions may continue to dampen export orders for Malaysian goods and prolong the sector’s recovery.

Malaysia Economic Growth

Economic growth is projected to decelerate next year. Uncertainty over the trade outlook for the U.S.-China rift will likely continue to hamper the external sector. Moreover, private consumption will likely slow as weakness in export-oriented sectors weighs on the labor market and wages. A rebound in fixed investment should counter the slowdown, however. FocusEconomics panelists see the economy growing 4.3% in 2020, which is unchanged from last month’s forecast, and 4.5% in 2021.

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Malaysia Facts

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

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