Malaysia: Malaysian economy expected to expand 4.5 per cent in 2017: IMF
MALAYSIA’S economy is expected to grow by 4.5 per cent in 2017 on strong private consumption but will continue to suffer from weak commodity prices and slowing private investment, the International Monetary Fund (IMF) said yesterday , according to Reuters.
The economy has been buffeted by poor demand for its exports of commodities and liquefied natural gas over the past year.
“While the Malaysian economy has adjusted well to lower global oil prices, sustained low commodity prices add to the challenges of fiscal consolidation,” said the IMF’s Daisaku Kihara, who led a two-week consultation mission to Malaysia early this month.
While Malaysia is a marginal oil exporter, it is the world’s third-largest exporter of LNG, contract prices for which are linked to crude-oil prices.
“Heightened global financial stress could potentially spill over to domestic markets,” Kihara said in a statement.
The IMF says Malaysia has performed well “despite significant headwinds” stemming from structurally weak growth in developed and emerging markets, and expects 2016 growth to come in at 4.2 per cent aided by a diversified economy and a flexible exchange rate.
Medium-term growth is seen at 4.5-5 per cent.
Malaysia’s ringgit, however, has been Asia’s worst-performing currency in recent weeks, at one point losing nearly 7 per cent against the US dollar after Donald Trump’s presidential election win on November 8.
To stem the decline, Malaysia’s central bank stepped in and warned of “prompt supervisory intervention” against any individuals or banks engaged in ringgit trade in the offshore non-deliverable-forwards market.
Kihara said the current monetary policy “is appropriate in the baseline scenario of moderate growth, low inflation and external uncertainties”, but stressed the need for careful calibration to support growth while maintaining financial stability.
He said Malaysia had made “significant progress” towards its goal of achieving high-income status, but needed continued efforts towards structural reforms to boost longer-term economic growth.
Malaysia will need to keep an eye on its “relatively high” household debt, and stay on track on its fiscal consolidation drive and goal of slashing its budget deficit to 3 per cent in 2017, Kihara added.
Source: http://www.nationmultimedia.com/news/business/aec/30302185