PUTRAJAYA, July 1 (NNN-BERNAMA) — Malaysia’s economy is expected to expand at a relatively moderate rate, with the gross domestic product (GDP) projected to record 4.6 per cent in 2019, says World Bank.
Lead economist in macroeconomics, trade and investment Richard Record said the GDP was 0.1 percentage points lower than in the previous forecast, reflecting weaker than expected investment and export activity observed in the first quarter (Q1) 2019.
The World Bank had in April maintained its forecast on the GDP at 4.7 per cent.
“Potential risks to growth include those related to escalating trade tensions, a sharper than expected slowdown in major economies, as well as volatility in the financial and commodity markets.
“Relatively high levels of private and public debt also pose risks to growth,” he told a press conference on the Twelfth Malaysia Plan 2021-2025 Kick-off Conference, here, Monday.
He said, while private consumption is expected to continue to support domestic demand, its growth is projected to decelerate to 6.6 per cent this year.
This follows a robust expansion in 2018, especially during the zero-rated GST period.
“In the public sector, the continued rationalisation of government expenditure will continue to weigh on its contribution, with the growth rate projected to stand at 1.8 per cent for the year,” Record said.
Meanwhile, Malaysia remains on track to achieve high-income economy status by 2024.
“Malaysia’s gross national income (GNI) per capita stood at US$10,460 in 2018, US$1,915 below the threshold level of US$12,375 that the World Bank currently sets to define high income country status,” Record said.
He said Malaysia could exceed the defined threshold at some point between 2021 and 2024.
“As Malaysia’s economy converges with the high income economies, it is important to be attentive to the broader aspects of development and societal well being such as health, education and the distribution of wealth, that are not adequately captured by advances in per capita income terms,” he added.
According to the 20th edition of World Bank’s Malaysia Economic Monitor (MEM), launched today, policies should focus on boosting resilience and protecting the vulnerable in the short term.
The report said, it was particularly important to rebuild fiscal policy buffers, facilitate private investment and ensure adequate social protection for low income and vulnerable households.
“A widening of the government’s revenue base should also be accompanied by efforts to expand and improve the social protection system to achieve greater overall progressivity.
“The government’s planned move to a more targeted fuel subsidy framework could lead to potential savings for reinvestment in core social welfare programmes,” the report said.
–NNN-BERNAMA