Malaysia Economic Monitor, December 2016 : The Quest for Productivity Growth
Malaysia’s economic growth has slowed down but remains resilient to external headwinds. The economic growth rate slowed from 5 percent in 2015 to 4.2 percent, year on year, in the first three quarters of 2016. Private consumption growth slowed down...
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Kuala Lumpur
2017
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| Online Access: | http://documents.worldbank.org/curated/en/773621481895271934/Malaysia-economic-monitor-the-quest-for-productivity-growth http://hdl.handle.net/10986/25857 |
| Summary: | Malaysia’s economic growth has slowed
down but remains resilient to external headwinds. The
economic growth rate slowed from 5 percent in 2015 to 4.2
percent, year on year, in the first three quarters of 2016.
Private consumption growth slowed down due to a softening
labor market and households’ ongoing adjustment to a context
of fiscal consolidation. Public investment in infrastructure
is offsetting moderation in investment in the oil and gas
sector. The gross domestic product (GDP) growth rate is
projected to reach 4.2 percent in 2016, with slow
improvement moving forward. The fiscal consolidation process
remains on track despite lower oil-related revenues.
External developments pose the greatest risk to Malaysia’s
growth trajectory. Uncertainty regarding the impact of
potential US fiscal stimulus policies on global trade,
energy prices, financial flows and exchange rates is a major
source of external risk, as evidenced with the recent
financial outflows from emerging markets and its impact on
the value of the ringgit. Bank Negara Malaysia (BNM) has
introduced measures to curb ringgit trading in offshore
markets while developing and deepening onshore foreign
exchange future markets. Continuing good performance on
fiscal outcomes, in large part thanks to the introduction of
GST, is important in building confidence in the policy
framework. This could be supported by further mobilizing and
diversifying fiscal revenues, including by broadening the
base for the personal income tax and removing some
exemptions in the GST. Also, raising efficiency of
operational expenditure (i.e. improving the targeting of
social assistance) and development expenditures (i.e.
greater inter-agency coordination) could provide some
additional fiscal space. |
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