Malaysia Economic Forecast

Malaysia Economic Outlook

April 24, 2018

The incumbent Barisan Nasional coalition will face an unprecedented challenge in the 9 May national election. The main opposition group, Pakatan Harapan, has found in former prime minister Mohamad Mahathir a solid candidate to win over Malay voters unhappy with rising living costs and financial scandals surrounding the current government. That said, the opposition remains split, while contentious lawmaking in recent weeks has improved the incumbent coalition’s chances. The election will take place against a backdrop of solid economic momentum. Industrial production is holding up, while tight labor conditions and healthy manufacturing wage gains are supporting private spending. In the months to February, exports proved resilient against a strong ringgit, while fiscal spending ahead of election day and softening inflation are expected to have supported households in the first quarter.

Malaysia Economic Growth

A broad-based, if moderate, slowdown is expected this year, the result of waning Chinese demand and rising household debt servicing costs. The government’s commitment to its fiscal deficit target of 2.8% of GDP this year also implies a severe consolidation effort in H2 after front-loading expenditures in H1. That said, underlying fundamentals remain upbeat, and our panel expects the economy to expand a strong 5.3% this year, unchanged from last month’s estimate. For 2019, panelists see growth at 5.0%.

Malaysia Economy Data

20132014201520162017
Population (million)30.230.731.231.732.3
GDP per capita (USD)11,78211,7369,5669,420-  
GDP (USD bn)324311298298-  
Economic Growth (GDP, annual variation in %)4.76.05.04.2-  
Consumption (annual variation in %)7.37.06.06.0-  
Investment (annual variation in %)8.14.83.62.7-  
Industrial Production (annual variation in %)3.45.24.73.8-  
Unemployment Rate3.12.93.13.5-  
Fiscal Balance (% of GDP)-3.8-3.4-3.2-3.2-  
Public Debt (% of GDP)53.052.754.552.7-  
Money (annual variation in %)7.77.52.93.1-  
Inflation Rate (CPI, annual variation in %, eop)3.22.72.71.8-  
Inflation Rate (CPI, annual variation in %)2.13.12.12.1-  
Inflation (PPI, annual variation in %)-2.41.3-7.5-1.1-  
Policy Interest Rate (%)3.003.253.253.00-  
Stock Market (annual variation in %)7.011.8-1.3-6.4-  
Exchange Rate (vs USD)3.283.504.294.49-  
Exchange Rate (vs USD, aop)3.153.273.914.14-  
Current Account (% of GDP)3.54.43.12.3-  
Current Account Balance (USD bn)11.214.99.17.0-  
Trade Balance (USD billion)22.425.123.221.0-  
Exports (USD billion)229234199189-  
Imports (USD billion)206209176168-  
Exports (annual variation in %)0.42.4-14.9-5.0-  
Imports (annual variation in %)4.91.4-15.7-4.4-  
International Reserves (USD)13511695.394.5-  
External Debt (% of GDP)65.663.065.368.5-  

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Malaysia Facts

ValueChangeDate
Bond Yield4.200.15 %May 16
Exchange Rate3.970.0 %May 16
Stock Market1,858-0.29 %May 16

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