In Malaysia, economic growth remained robust in 2023 even if it decelerated due to unfavourable base effects. Domestic demand was the principal driver, whereas exports contracted substantially. The outlook for 2024 remains positive and economic growth is expected to recover slightly [...]
In 2023, for the second consecutive year, Malaysia’s external accounts have deteriorated slightly, but are still strong. Over the first nine months of the year, the current account surplus decreased by 18.3% compared to the same period last year. The strong rebound in tourism has not been enough to offset the decline in the trade surplus caused by the global economic slowdown and the sharp contraction in demand for semiconductors and electronic products, which account for 36 [...]
Malaysia’s economy held up well in 2022. Economic growth may have exceeded 8% and public finances strengthened thanks to the sharp rise in oil revenues. Furthermore, although external accounts weakened due to capital outflows and increased imports, the current account balance remained in surplus and the ringgit depreciated moderately against the dollar over the year as a whole. The outlook for 2023 is less favourable [...]
Summary: In November, Anwar Ibrahim became the new prime minister but the political environment remains particularly unstable. However, in the past three years, the Malaysia’s economy has been buoyant and resisted fairly well to successive external shocks. Economic growth is robust. Although public finances are still weaker than before the pandemic crisis, they have strengthened since the beginning of the year.
After a modest growth in 2021, Malaysia’s economy is set to recover more strongly in 2022. It will be supported by firm domestic demand, an expansionary fiscal policy and the reopening of Malaysia’s borders to tourists. The country is an exporter of commodities – mainly oil and palm oil – and should benefit from higher international prices, without being directly affected by the conflict in Ukraine [...]
Although the political situation has stabilised somewhat following the appointment of a new prime minister, the economic environment has deteriorated. The spread of the Covid-19 pandemic in April forced the government to reintroduce lockdown measures that led to an economic contraction in Q2 2021. The situation is unlikely to improve before Q4, once health restrictions are lifted thanks to an accelerated vaccination campaign [...]
Malaysia is one of the emerging Asian countries hit hardest by the Covid-19 crisis. Although a recovery is underway, it is bound to be hampered by new lockdowns in Q4 2020 and January 2021. Public finances have deteriorated sharply, but the government does not seem inclined to pursue fiscal consolidation. It is giving priority to the economic recovery and support for the most fragile households [...]
Malaysia is an upper-middle income, highly open economy with a record of strong economic performance and poverty reduction since independence from Great Britain in 1957. Malaysia enjoys significant natural resources, as the second largest oil and natural gas producer in Southeast Asia, and the second largest exporter of liquefied natural gas globally. Meanwhile, thanks to the diversified structure of its economy, Malaysia has proved its resilience to external shocks. In the period 2015-2019, economic growth has been robust and reached 4.9% per year on average. However, in 2020, Malaysia recorded its deepest recession in twenty years due to the COVID-19 pandemic shock. In the medium term, economic prospects are favourable although Malaysia is highly exposed to rising protectionism and trade tensions given its high degree of openness and its extensive integration in global value chains. In order to elevate potential growth and move Malaysia’s GDP per capita closer to that of high-income economies, the government needs to continue to stimulate the participation of women in the workforce and encourage investments in innovation and new technology.
Already weakened before the crisis due to the removal of the Goods and Services Tax in July 2018 (GST), public finances deteriorated further with the COVID-19 crisis. However, despite the high level of debt, refinancing risks have been moderate so far, thanks to abundant domestic savings and a wide range of domestic investors that maintain the government’s borrowings costs at a low level. However, the structural decline in the government’s revenues and the increase in the burden of gross interest payments have reduced the central government’s capacity to provide fiscal support in response to a new, large shock.