Malaysia's economic growth forecast of 2018 dropped to 4.7 percent from 4.9 percent due to the effects of the U.S.-China trade friction and the unstable commodity prices according to the World Bank.
The World Bank's Malaysia Economic Monitor report said that Malaysia's economy will expand at the same pace next year. The Multilateral agency predicted that Malaysia's private consumption will lead its growth in 2019. The nation's export growth is expected around 3 percent next year a slight increase with the estimate of 2.8 percent in 2018.
Shakira The Sharifyddin, World Bank's Malaysia Economist, said on a conference that they revised their forecast of Malaysia's economic growth because of two developments which are lower government spending and investments.
After winning the Election on May 9, Prime Minister Mahathir Mohamad, through the Alliance of Hope, terminating and reviewing several costly infrastructure projects to mend Malaysia's finances amid large government debt.
The report of the WorldBank's East Asia and Pacific Economic Update said that the country's gross fixed capital formation is expected to increase at a low rate public spending which will affect growth prospects. The report said that the projects gross fixed capital growth will fall by 2.1 percent from 6.2 percent in 2017.
The prediction of the World Bank is the latest economic growth downgrade for Malaysia. The Asian Development Bank also lowered the nation's economic growth in September to 5.0 percent for 2018 and 4.8 percent next year because of the unstable exports growth of the nation and its limited local investments.
Reports showed that the nation's economic growth rate dropped consciously for four consecutive quarters and it expanded by 4.4 percent from July to September. It was also forecasted by the central bank that Malaysia's economy will grow by 4.8 percent this 2018.
The World Bank said that with Malaysia's economy tightly integrated with the global economy through financial and trade linkages, increased uncertainty in the external environment poses downside risks in the near future. The agency said that the country's dependence on oil-related revenue might threaten its fiscal space in cases of price or supply shocks.
According to Mara Warwick, World Bank's Country Director for Brunei, Malaysia, Philippines, and Thailand, the agency still believes in Malaysia's capacity to improve its growth since its government is taking measures to preserve its growth. It is also working to restore fiscal buffers and improve its governance.
