Malaysia Economic Forecast

Malaysia Economic Outlook

September 18, 2018

Recent indicators suggest the economy has gained pace in Q3. In July, industrial production growth picked up on the back of faster expansions in the manufacturing and electricity sectors, while the trade surplus widened in the same month on stronger export growth. In addition, the manufacturing PMI returned to expansionary territory for the first time in seven months in August thanks to higher new orders and output. In September, the government announced the increase and standardization of the minimum wage from 1 January 2019, which bodes well for private consumption next year. In order to rein in spending, the government signed an agreement to postpone work on a high-speed railway between Kuala Lumpur and Singapore by two years, after initially announcing it would scrap the project entirely. Meanwhile, the sales and services tax (SST) was reinstated on 1 September. However, it will not cover the revenue shortfall from the zero-rating of the goods and services tax (GST).

Malaysia Economic Growth

In H2 the economy should benefit from strong private consumption. However, economic activity is likely to moderate next year as rising trade tensions and a cooling Chinese economy dent foreign demand for Malaysian goods. Uncertainty over the fiscal position and a small revenue base pose downside risks to the outlook. Met the why particular Consensus Forecast panelists expect the economy to grow 5.0% in 2018 and 4.8% in 2019, which is down 0.1 percentage points from last month.

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Malaysia Facts

Bond Yield4.130.15 %Oct 16
Exchange Rate4.150.0 %Oct 16
Stock Market1,737-0.29 %Oct 16

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