4.8% growth seen for next year
economic prospects remain robust amid external uncertainties
> Domestic economy
THE prospects of the Malaysian economy remain robust amid increasing uncertainties in the external environment with real GDP expected to grow by 4.7% this year and 4.8% in 2020.
Growth will be underpinned by resilient domestic demand, particularly household spending following stable labour market and low inflation.
Private investment is expected to grow at a slower pace this year and gain traction next year following the resumption of infrastructure projects and ongoing capital spending in the services and manufacturing sectors.
Economic growth is expected to rebound in 2020 with improvement in public corporations’ capital outlays.
On the supply side, the services and manufacturing sectors will continue to be the main contributors to economic growth.
The services sector, driven by the activities of the wholesale and retail trade, information and communications, as well as finance and insurance sub-sectors, is projected to remain firm backed by robust household spending.
The manufacturing sector is expected to grow at a slower pace this year due to the E&E downcycle and is anticipated to pick up in 2020, supported by better semiconductor outlook, especially in the second half of the year.
The agriculture sector is projected
to expand following higher production of crude palm oil and natural rubber, while the mining sector is expected to increase supported by higher production of natural gas.
The construction sector is also expected to improve due to activities in civil engineering.
> Bumiputra economic development
Despite various programmes implemented for the economic development of bumiputra, the involvement of the community is still lacking.
The mean monthly household income of bumiputra in 2016 was RM6,267, lower than the Malaysian Chinese (RM8,750) and Malaysian Indians (RM7,150).
Bumiputra graduates also experience difficulties in getting suitable jobs due to several factors including lack of English proficiency.
> Quality healthcare and tourism industry
Provision of quality healthcare services is a priority of the government,
with the main challenge being the escalating cost vis-a-vis constraint on government finance.
The tourism industry is one the primary drivers of economic growth, accounting for 15.2% of GDP in 2018.
Although tourism receipts improved by 2.4% between 2017 and 2018, statistics from Tourism Malaysia indicates a declining trend in tourist arrivals since 2017.
The tourism industry has yet to achieve its true potential. > Global economy
The global economy is expected to grow at a slower pace of 3.2% in 2019 before improving to 3.5% in 2020.
The growth will primarily be supported by stronger performance in emerging markets and developing economies.
Growth in advanced economies meanwhile is forecast to increase at a slower pace from 1.9% in 2019 to 1.7% in 2020.
Among advanced economies, the US is expected to record robust growth in 2019 before slowing down in 2020 due to the winding down of fiscal stimulus as well as on-going inward-looking trade policies.
Growth in the euro area is expected to moderate in 2019 due to weaker industrial production and is projected to grow marginally in 2020as industrial activities regain momentum.
In the UK, the Brexit uncertainty continues to impact business and domestic demand but growth next year is expected to stabilise after Brexit on Oct 31, 2019.
Japan’s growth in 2019 is expected to pick up slightly, supported by private consumption and investment while in 2020 is is projected to moderate following higher consumption tax and sluggish exports.
Global inflation is anticipated to be sustained at 3.6% for both this year and 2020.