KUALA LUMPUR: The World Bank forecasted Malaysia’s RM1.41 trillion economy to grow at 4.7 per cent this year and to slow down to 4.6 per cent for next year.
In its January 2019 Global Economic Prospects report titled ‘Darkening Skies’, the World Bank said Malaysia’s lower public investment is weighing on growth, reflecting the completion of several infrastructure projects and a more prudent approach toward new ones.
The bank said in contrast to the regional trend, import growth in Malaysia has been weak, reflecting weak demand for capital goods imports combined with lower imports of intermediate goods.
The report also highlighted Malaysia had pockets of vulnerabilities, including high levels of public and private debt, external debt, foreign participation in local-currency sovereign bond markets.
Furthermore, the cost of rising import tariffs may be magnified by Malaysia’s participation in complex global value chains.
The report also pointed out Malaysia is among the countries with the highest educational attainment and the lowest share of informal employment at 25 per cent of working population.
Oil prices are expected to average at US$67 per barrel in 2019 but uncertainty around the forecast is also high.
While growth in oil demand is expected to remain robust in 2019, supply is uncertain and depends to a large extent on production decisions by Organization of the Petroleum Exporting Countries (OPEC) and its non-OPEC partners.
World Bank noted OPEC members have agreed to cut output by 1.2 million barrels per day for six months starting January 2019 but is unsure if this move would be price supportive.
The World Bank report noted global economic growth is projected to soften from a downwardly revised 3 per cent in 2018 to 2.9 per cent in 2019, amid rising downside risks to the outlook.
Growth among advanced economies is forecast to drop to 2 per cent this year.
Slowing external demand, rising borrowing costs, and persistent policy uncertainties are expected to weigh on the outlook for emerging market and developing economies, said the report.
World Bank chief executive officer Kristalina Georgieva said at the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier this year.
“As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardized,” she said.
“To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies,” she added.
- NST Business