Malaysia Economic Forecast

Malaysia Economic Outlook

November 13, 2018

Although national accounts data for the third quarter is still outstanding, monthly indicators suggest that the economy picked up speed. Average annual growth in retail sales increased noticeably in Q3—benefiting from weak inflationary pressures following the zero-rating of a goods and services tax. Moreover, the manufacturing PMI averaged higher in Q3 than in the second quarter. On the other hand, export growth in the July–September period moderated notably—despite a robust performance in September—on tough prior-year comparatives and rising global trade tensions. Moreover, despite a strong manufacturing sector, annual industrial output growth averaged lower in Q3 compared to the previous quarter, due to a poor performance from the mining sector. The fourth quarter got off on the wrong foot, with the manufacturing PMI falling into contractionary territory in October on lower new orders. In early November, the new government presented an expansionary draft budget signaling a move away from the previous years of fiscal consolidation.

Malaysia Economic Growth

Next year, the economy is expected to be supported by strong private consumption growth and a solid manufacturing sector. However, risks are tilted to the downside and include a possible flare-up in trade tensions, heightened volatility in financial markets, and concerns over the impact the more expansionary fiscal stance could have on the health of government finances. Met the why particular Consensus Forecast panelists expect the economy to grow 4.7% in 2019, which is unchanged from last month’s forecast, and 4.4% in 2020.

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Malaysia Facts

Bond Yield4.160.15 %Nov 15
Exchange Rate4.190.0 %Nov 15
Stock Market1,694-0.29 %Nov 15

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