Malaysia Economic Forecast

Malaysia Economic Outlook

May 21, 2019

The economy lost some impetus in Q1, after accelerating in the final quarter of 2018. The slowdown was driven by a contraction in fixed investment, slower growth in private spending following a surge in Q4, and a weaker external sector, while robust public spending limited the slowdown. On a more positive note, wage growth in the manufacturing and services sectors comfortably outpaced inflation in Q1. Moving to Q2, growth should be fairly stable as more expansionary monetary policy shores up domestic demand. The IHS manufacturing PMI edged higher in April, on stronger business sentiment and new export orders. In other news, in mid-May the Central Bank outlined several new initiatives aimed at boosting the efficiency and liquidity of domestic financial markets, which bodes well for the private sector.

Malaysia Economic Growth

Growth is seen tapering this year amid softer household spending growth and a weaker expansion in public consumption. Moreover, the external sector is seen ebbing amid a maturing tech cycle, which could spill over into the labor market and domestic demand. Elevated trade tensions and uncertain Chinese import demand pose downside risks. Our panel sees the economy growing 4.5% in 2019, which is unchanged from last month’s forecast, and 4.5% again in 2020.

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Malaysia Facts

Bond Yield3.740.15 %Jun 13
Exchange Rate4.170.0 %Jun 13
Stock Market1,644-0.29 %Jun 13

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