UPBEAT OUTLOOK
THE World Bank has upgraded its growth forecast for Malaysia’s 2018 gross domestic product to 5.4 per cent on the back of strong private sector expenditure.
THE World Bank has raised its forecast for Malaysia’s gross domestic product (GDP) growth to 5.4 per cent this year, from 5.2 per cent previously, driven by a high level of private sector expenditure.
The revision, the first for this year, is the fourth in a row following three upward reviews from 4.8, 5.2 and 5.8 per cent last year.
The Washington-based instituti on proje cte d Malaysia to achieve the high-income status between 2020 and 2024.
It has also raised the country’s GDP growth forecast to 5.1 per cent for next year from October’s forecast of 4.8 per cent.
World Bank said Malaysia had experienced a significant acceleration in growth at 5.9 per cent last year, supported by a confluence of favourable domestic and external factors.
“Malaysia’s growth is expected to stay strong in the near term albeit at a more moderate pace, compared with last year. In aggregate, it is forecast to post economic growth of 5.4 per cent this year, supported by the continued strength in private consumption,” the bank said in its East Asia and Pacific Economic Update yesterday.
“With the anticipated decline in public investment, gross fixed capital formation will be driven mainly by the expansion of private sector capital expenditure, which is expected to be sustained via continued flows of infrastructure projects and capital investments in the manufacturing and services sectors.
“The strength of Malaysia’s export performance is expected to continue into the first half of this year, in tandem with the ongoing cyclical upturn in global trade, although at a lower rate than the preceding year,” it added.
Also taken into consideration was the government’s commitment to fiscal consolidation amid a continued expectation that the fiscal deficit target of 2.8 per cent of GDP would be achieved this year.
“Malaysia’s economy is projected to expand at 5.1 per cent next year and 4.8 per cent in 2020, and is expected to achieve high-income country status between 2020 and 2024.”
However, the World Bank said uncertainties in the global outlook continued to weigh on Malaysia’s growth as the economy was vulnerable to shifts in external demand and global financial market conditions.
It said downside risks to Malaysia’s growth prospects relate mainly to the external environment. In particular, an abrupt adjustment to global financial market conditions, or weaker-than-expected growth in major economies and export demand could have disproportionately negative spillovers on the country, given its high level of integration with global economy and financial markets.
“Domestically, downside risks relate primarily to the relatively high level of household and public sector debts, as well as uncertainties surrounding the 14th General Election.”