- 2019-01-25
Malaysia's economy is expected to pick up and accelerate after 2020
"Malaysia, as an open economy, is vulnerable to global trends. Economic growth in every region of the world will slow down in 2019 and 2020." International credit rating agency Moody's Asia Pacific Chief Economics Department Karen attended Moody's recently. This was pointed out in the Economic and Credit Risk Forum.
He predicted that Malaysia’s real gross domestic product (GDP) will slow from 5.9% in 2017 to 4.8%, and will slow to 4.4% and 3.6% in 2019 and 2020, respectively. "The slowdown in global economic growth has pushed down the prices of original products, which will inevitably impact emerging markets and Malaysia. We have not seen any upward trend in the prices of original products until the global economy improves."
Due to high inventories and weak demand, crude palm oil prices have been weak since the beginning of 2018, with crude palm oil futures prices hovering at around RM2,000 per ton.
He said that the fiscal stimulus measures that support the U.S. economy are expected to end in 2020, which may slow down U.S. economic growth, which in turn will depress the global economy and raw product markets.
"If we come to 2020 and the European and American economies are not in recession, then the global economy is expected to rebound in 2021 and 2022."
Cochrane said that the trade war between the United States and China has also impacted the global economy and trends. The worst-case scenario that can be envisaged is that this will disrupt the supply chain, lead to a recession in the U.S. economy, and then impact other economies. “Everyone is focusing on Trump’s meeting with Xi Jinping to find a solution to the trade war and whether the Trump administration will allow tariffs to be raised to 25% in 2019.”
He pointed out that if the US-China trade war expands and tariffs increase, this will impact Malaysia and the global economy. The Malaysian economy faces downside risks as the weak global economy is expected to depress international crude oil prices and export orders.
"As a net oil exporter, the decline in oil prices means that exports will shrink. The decline in crude oil prices is due to slowing global demand, and the U.S. rock oil producing areas have accelerated production in 2017. Accelerated U.S. production means that the Organization of Petroleum Exporting Countries has weakened control Price capacity."
Cochran pointed out that imposing sanctions on Iranian oil has not had a significant impact on oil prices, as there are some exceptions. The oil price is based on West Texas Intermediate (West Texas Intermediate) measures. It is estimated to be US$69.1 per barrel in 2018, and US$67.2 and US$63.5 in 2019 and 2020, respectively.
Cochrane emphasized that the Malaysian government achieved a peaceful transfer of power in 2018. It is committed to improving transparency, obtaining positive responses from investors, and increasing investor confidence. In the long run, good debt management will support economic growth because it will Reduce debt service budgets.
"Based on the government's tightening of fiscal policy in order to improve debt management at a time when export growth slows, Malaysia's economy is expected to slow down in the next two years."
WEF World Competitiveness Ranking. Malaysia fell to 25th
According to a report by the World Economic Forum (WEF), Malaysia ranked 25th in the country's world competitiveness in 2018, which dropped two places from last year and fell back to the 25th place in 2016.
Malaysia's performance among ASEAN countries is behind Singapore. Singapore is the only country in ASEAN that has improved its ranking, jumping from third to second. The rankings of other ASEAN countries have fallen. Thailand dropped from 32nd to 38th, Indonesia dropped from 36th to 45th. Philippines (56th), Brunei (62nd), Vietnam (77th), Cambodia (110th) and Laos (112th).
Among the Asia-Pacific economies, Malaysia ranks 8th, and its performance is slightly better than that of China, which ranks 28th. The other top countries and regions are Japan 5th, Hong Kong 7th, Taiwan 13th, Australia is 14th, South Korea is 15th and New Zealand is 18th.
According to the 2018 Global Competitiveness Report, Malaysia’s global competitiveness scores 74.4 points among 140 economies. Among the 12 key assessment projects, Malaysia has maintained and improved, except for the decline in infrastructure performance, which ranked 32nd.
Malaysia ranks 24th in terms of institutional structure, technology applications (32nd), macroeconomic stability (1st), healthcare (62nd), technical standards (24th), product markets (24th), Labor market (20th), financial system (15th), market size (23rd), business vitality (19th), innovation (30th).
The results of the report reflect a strong correlation between competitiveness and income levels. For example, high-income economies occupy the top 20, and only three non-high-income economies rank in the top 40, namely Malaysia, which ranks 25th. China (28th) and Thailand (38th). But when it comes to building the cornerstone of competitiveness at current income levels, some economies have performed too well and some have underperformed.
In facing the Industrial Revolution 4.0, Malaysia ranks among the top 10 “ready for the future”, ranking 9th, Singapore occupies the first place, Luxembourg, the United States, the UAE, and Brazil, Greece and Venezuela. I think it is the most unprepared country for the future. For economies that are relatively well below the trend line, including Malaysia, Mexico, Indonesia, and India, the results show that if they can maintain their competitive performance, they will promote higher and maintain future income levels.