by AZREEN HANI / pic by BLOOMBERG
MALAYSIA is expected to register a moderate growth this year, fuelled by the services and manufacturing sectors, as worries on a global recession recede with the tempering of the US-China trade war.
The US and China trade deal, slated to be signed on Jan 15, is expected to ease pressures on Malaysia after a turbulent 2019 with growth dragged down by BeijingWashington economic threats.
The Malaysian economy would continue to grow and is forecast to meet the 4.5% growth projection this year.
“I believe the US and China trade deal definitely will ease off some economic burdens on our economy, and the receding risks of a global recession will lift our growth trajectory,” the Socio-Economic Research Centre ED Lee Heng Guie told The Malaysian Reserve recently.
“I will stick to the 4.5% forecast for our GDP. We are going to expand and our growth will still mostly rely on domestic consumption,” he added.
Lee also said the biggest challenge for the government this year would be to revive private investment.
“Last year, our private investment’s performance was bleak due to internal and external factors. My take for this year, the government needs to make Malaysia more competitive and have a manageable cost of doing business to attract more foreign firms to invest here,” he said.
The services and manufacturing sectors are expected to support Malaysia’s growth, mainly driven by the Visit Malaysia 2020 campaign and the Asia-Pacific Economic Cooperation Summit.
“These two events will spur demand in our services sector. We can also expect moderate growth in the electrical and electronics (E&E) sector.
“Semiconductor industry is going to prevail strongly this year on the back of 5G technology development and demand on the wireless industry,” he said.
Some of the government’s policies such as the Shared Prosperity Vision 2030 have put the investors’ concerns to rest, especially on the country’s economic direction, Lee said.
“However, the government has to ensure its policies are implemented efficiently, to restore confidence,” he said.
The World Bank in its Economic Monitor Report last December said Malaysia’s economic activity is projected to grow at a relatively moderate pace in 2020 amid increased headwinds.
It revised Malaysia’s growth forecast to 4.5% from 4.6% due to the weaker than anticipated investment and export growth in the third quarter of 2019 (3Q19).
“However, private consumption will continue to be the primary anchor for growth,”World Bank Group lead economist Dr Richard Record had said.
Economist from University Tun Abdul Razak Prof Dr Barjoyai Bardai said Malaysia’s economic foundation remains solid as it enters the new decade, as evident in the 5% growth in production index and export per annum.
“Our economy is ready to soar this year and we can meet the 4.5% projection,” Barjoyai said when contacted last week.
“We may experience two negative growths in the 3Q and 4Q as based on the economic trend, we have not reached the bottom of the cycle, but there is a chance we will not experience it at all,” he said.
This, he said, is attributable to the expansion of the digital economy and Industrial Revolution 4.0 that will safeguard the economy from falling into a recession, similar to what happened in Australia.
Malaysia, he said, has been one of the beneficiaries in the US-China dispute and the semiconductor industry is expected to make a strong comeback this year.
“Due to the trade dispute, we have seen both US and China firms choosing to settle in our country, especially for the E&E and semiconductor sectors. This has given us the exposure and skills to develop our expertise,” Barjoyai said.
For the stock market, the economist is optimistic that it could reach up to 1,750 points this year.
The local equity market was a major disappointment last year, dropping more than 7% at one point, making it among the worst modern markets in 2019.