KUALA LUMPUR: The World Bank Group has revised Malaysia’s gross domestic product (GDP) growth forecast slightly downwards to 4.5% for 2020, compared with this year’s projection of 4.6%.
Its macroeconomics, trade and investment lead economist Richard Record said the slightly lower GDP forecast was largely due to weaker-than-anticipated investment and export growth in the third quarter of 2019 (3Q19).
“Private consumption is projected to expand at a still robust rate of 6.5% next year, underpinned by stable labour market conditions, relatively benign inflation, and continued support from government measures,” he told reporters at the launch of the 21st edition of the Malaysia Economic Monitor – ‘Making Ends Meet’ today.
For the public sector, he said the planned rationalisation of the government’s operating expenditure would continue to weigh on the contribution from government consumption, which is projected to grow at 1.8% in 2020 as compared to its 1.7% forecast in 2019.
“Gross fixed capital formation is expected to improve but will remain subdued over the near term, with both the public and private sectors continuing to adopt a cautious stance regarding capital spending. Overall, investment activity is projected to expand at 1.4% next year, 0.3 percentage points lower than the previous forecast.
“The downward revision largely reflects weaker-than-expected private investment activities in 3Q19, as subdued trade prospects and increased uncertainty weighed markedly on business confidence and investment intentions,” he added.
On the other hand, Record said public investment would likely continue to contract over the near term, albeit to a lesser extent, following increased planned investments by public corporations in the transport and mining sectors.
For export, he said it was projected to remain modest at 0.5% next year in the context of challenging global economic conditions and prolonged trade-related uncertainty, but was expected to be partially offset by a recovery in mining exports from unforeseen supply disruptions in recent quarters.
“Similarly, import growth is projected to pick up modestly at 0.4% in 2020, as growth of intermediate and capital exports regains some momentum with slight improvements in export and investment activity.
“The current account surplus is projected to narrow to around 3% of GDP in 2020, with a more moderate trade surplus in goods continuing to offset the persistent deficits in services and income accounts,” he said. – Bernama
