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World Bank: Malaysia’s economic fundamentals remain strong

World Bank Group’s macroeconomics, trade and investment lead economist Richard Record said Malaysia’s diversified income stream such as electrical and electronic manufacturing, commodities, natural resources, agriculture, as well as external and domestic demand would give strength to Malaysia.

KUALA LUMPUR: Malaysia’s economic fundamentals remain strong due to its diversified economy, despite the recent downgrade by Nomura Global Markets Research on the Malaysian equity market, says the World Bank.

World Bank Group’s macroeconomics, trade and investment lead economist Richard Record said Malaysia’s diversified income stream such as electrical and electronic manufacturing, commodities, natural resources, agriculture, as well as external and domestic demand would give strength to Malaysia.

“In the medium term, there are challenges around human capital, productivity and governance. However, we have seen a lot of movement in the 11th Malaysia Plan Mid-Term Review for 2019-2020 whereby the government is setting out new plans to tackle those issues over the next few years,” he told reporters on the sidelines of the World Bank’s Conference on “Globalisation: Contents and Discontents” here yesterday.

Record said Malaysia’s economic growth continued to be stable and the World Bank has projected it to grow at 4.7% for 2019.

Meanwhile, economist and Khazanah Research Institute visiting research fellow Prof Jomo Kwame Sundaram said whether a country is doing well, especially an open economy like Malaysia, is subject to many things.

“Rating agencies are notoriously useless. I do not believe in rating agencies but a lot of people do, or else they would be out of business,” he added.

Jomo was one of the chairpersons for a panel session at the conference.

On Jan 9, Nomura Global Markets Research downgraded the Malaysian equity market to “underweight” from “neutral” previously, on poor earnings growth prospects and higher fiscal deficit of 3.9% for 2018.

In response to the report, Finance Minister Lim Guan Eng issued a statement on Jan 10, saying that the government was confident of achieving 3.7% and 3.4% of fiscal deficit in 2018 and 2019, respectively.

“I have checked with the preliminary financial accounts that were closed last year and the government’s fiscal position is well within the 3.7% of gross domestic product (GDP) deficit target for 2018.

“Nomura’s report that the 2018 fiscal deficit would deteriorate to 3.9% of GDP is simply untrue,” he added.

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