By G. Sharmila
Malaysia’s economic growth is expected to ease from 4.7% this year to 4.5% in 2016, said the World Bank in the latest edition of its Malaysia Economic Monitor report.
“The outlook reflects some slowdown in domestic demand in 2015 from tighter fiscal conditions, which are expected to continue in 2016-17. As a result, private consumption growth will moderate from 7% in 2014 to 5.3% in 2015 and 2016, affected by the slowdown in disposable income and a soft labour market,” the bank said in the report, which was launched today.
“Despite headwinds from the oil and gas sector, fixed investment is projected to continue expanding, driven by strong public infrastructure development. Overall, domestic demand is projected by 5.1% and 5%, in 2016 and 2017 respectively. Domestic demand will remain the main driver of growth in a context of soft global demand,” the report said.
The report further said that in a context of uncertain global growth, subdued oil prices and financial market volatility, a focus on boosting investor sentiment is critical.
“Delivering on policy commitments, such as fiscal consolidation, and resolving political issues that challenge Malaysian institutions and transparency can reassure foreign investors. Also, the recent conclusion of the Trans-Pacific Partnership agreement represents an important commitment on structural reforms that may further increase output potential in the medium term, further boosting investor sentiment,” the report said.
According to media reports, earlier this month World Bank chief economist for East Asia and Pacific region Sudhir Shetty had predicted Malaysia would record 4.2% growth in 2016 before gradually rising again in 2017.
Shetty reportedly said that while Malaysia’s current policies provided a good base, to navigate the global uncertainties, it needed to consider further improving public sector performance, accelerate human capital development and re-engineer economic growth.
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