Malaysia Economic Monitor, December 2019 : Making Ends Meet
Malaysia's economy is continuing to see growth, but the pace of expansion has moderated. Growth slowed to 4.4 percent in Q3 2019, as subdued global conditions and heightened uncertainty continued to weigh on the economy. Investment and trade a...
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| Format: | Report |
| Language: | English |
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World Bank, Kuala Lumpur
2019
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| Online Access: | http://documents.worldbank.org/curated/en/616631575645435287/Malaysia-Economic-Monitor-Making-Ends-Meet http://hdl.handle.net/10986/32810 |
| Summary: | Malaysia's economy is continuing to
see growth, but the pace of expansion has moderated. Growth
slowed to 4.4 percent in Q3 2019, as subdued global
conditions and heightened uncertainty continued to weigh on
the economy. Investment and trade activity was softer than
expected during the quarter, and indicators suggest overall
business sentiment remains muted. In 2020, Malaysia's
economy is projected to expand at a relatively moderate
pace, amid continued uncertainty and external headwinds. The
GDP growth rate is projected to reach 4.5 percent in 2020.
Investment is expected to improve but remain subdued over
the near term, with both the public and private sectors
adopting a cautious stance towards capital spending.
Similarly, the softness in export growth is likely to
persist into next year, mirroring the continuing subdued
global growth. Short-term policies should focus on measures
to boost resilience and protect the vulnerable. Federal debt
has increased, and government revenue as a share of GDP is
expected to decline further next year. In the context of a
more uncertain economic environment, it is vital for
Malaysia to preserve fiscal space to enable it to mitigate
the impact of any negative shocks to the economy. Increased
progressivity in the personal income tax framework and an
expansion of current tax measures could enable the
government to both increase revenues and improve
redistribution. Malaysia's weakening trade and
investment activity, amid challenging external conditions,
underscores the need to improve private sector confidence
and strengthen investment competitiveness. With sluggish
global demand and increased protectionist tendencies among
the majoreconomies, a sustained commitment to deepening
regional integration and addressing trade barriers is vital
to preserve a vibrant trading environment and build
investors' confidence. It is also important to
strengthen Malaysia's competitiveness in attracting
quality investments and to maximize the gains from tax
expenditures with better targeting of investments towards
economic upgrading, high-value job creation and inclusive growth. |
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