KUALA LUMPUR: Malaysia’s economy remains resilient, with gross domestic product (GDP) projected to grow by 4.4% in 2016 and 4.5% in 2017, according to new economic analysis from the World Bank.
Compared with the estimate of 4.5% for 2016 in its December 2015 report, the outlook reflects a gradual deceleration in private consumption in Malaysia due to softening in the labour market and continued adjustment to fiscal consolidation. Private investment is also expected to slow down as commodity prices and global economic growth remain subdued, according to the World Bank’s Malaysia Economic Monitor launched yesterday.
World Bank senior country economist for Malaysia Dr Rafael Munoz Moreno said although the GDP projection was made before Brexit, it is keeping to its projection for now, advising that the Brexit impact will be monitored for any changes needed.
The Malaysia Economic Monitor notes that key risks facing the Malaysian economy stem from commodity price instability and uncertainty over the growth trajectory in the global economy and its impact on Malaysia’s exports.
Moreno said the narrowing of the current account surplus is expected to moderate to 2.1% of GDP in 2016 from 3% in 2015 as overall export growth is expected to remain stagnant amid low commodity prices and weak global growth. However, Malaysia has a well diversified export base, mainly in manufacturing goods, continues to provide support for exports.
“The Malaysian economy is holding up well and is resilient given the challenges of the external environment,” he added.
The report includes a special focus on the strategic relevance of trade agreements, such as Regional Cooperation Economic Partnership, the Trans-Pacific Partnership (TPP) and the European Union Free Trade Agreement, for Malaysia’s successful development.
The implementation of new regional trade agreements can help Malaysia implement key economic reforms in four key areas of services, investment, competition and SME, which is needed to accelerate the country’s transition to high-income status.
Meanwhile, on US presidential candidate Donald Trump blasting the TPP, outgoing International Trade and Industry Ministry secretary-general Tan Sri Dr Rebecca Fatima Sta Maria said there will be no renegotiations on the TPP. Datuk J. Jayasiri takes over her role tomorrow.
“If the US does not ratify the agreement, it (TPP) will not be implemented. The way the agreement is written for entry into force, you need that criterion,” said Rebecca said in a panel discussion.
If that happens, she opined that the 11 countries (excluding the US) will discuss and look at implementing a free trade agreement in someway or another.
“There will be some conversations that the 11 others will need to undertake. Regardless whether or not the TPP sees the light of day, the process has been extremely beneficial for Malaysia. The kinds of dialogues and conversations that we’ve had are very difficult and sensitive issues. We would not have had them but for the TPP negotiations,” said Rebecca.
– The Sun