The World Bank maintained its 2024 economic growth outlook for Malaysia at 4.3% in its April 2024 East Asia and Pacific Economic Update based on expectations of a possible recovery in global growth and moderate financial conditions.
Head of East Asia and Pacific Economics, Aaditya Mattoo said domestic demand will continue to be the focus of growth and Malaysia is also set to benefit from the recovery in the export market.
Private industry is expected to grow by 5.2% from 4.7% in 2023 driven by labor market conditions and continued household income support measures.
In addition, gross exports are projected to rebound by 4.8% from last year's 7.9% contraction in line with the expected recovery in global trade.
As Malaysia is exposed to China, its slow growth will have side effects in the local economy.
According to Mattoo, China's growth is expected to moderate to 4.5% this year from 5.2% in 2023 amid short-term problems such as high debt, a weak real estate sector and long-term challenges such as aging and trade.
For Malaysia, the country has great potential to improve its economy and should not be satisfied with the current growth rate.
The Malaysian government is also now facing continuous challenges in limiting the fiscal space in the national economy.
They recently announced plans to end the pension scheme for civil servants and their intention to review price controls and subsidies in 2024.
It has been shown that subsidies will be more targeted to the neediest people through direct cash transfers.
In terms of income, the World Bank said the government has introduced several measures during the presentation of the 2024 Budget and the fiscal impact of these measures is expected to have less impact.
