PUTRAJAYA: The Malaysian economy is expected to grow at 4.6 per cent this year and 2020, slightly lower than the 4.7 per cent posted in 2018, due to weaker than expected investment and export activity, the World Bank said.
It said Malaysia’s deep financial and trade integration with the global economy, unresolved trade tensions, heightened protectionist tendencies among major economies and volatility in financial and commodity markets would pose risks to growth in the near term.
“We are still optimistic of the recovery in the global trade and the global growth returning to its trend rate. By 2020, the technology cycle will move up again,” said the World Bank lead economist Richard Record at the launch of the bank’s report on Malaysia Economic Monitor here today.
The report highlighted on re-energising the public service and building public service capacity in line with Malaysia’s transition to become a high-income and developed nation.
The report also suggested the policy actions should aim to strengthen fiscal buffers and facilitate private investment, ensuring adequate social protection for lower-income households.
Record said bold reforms and measures were needed in the medium term to boost human capital and increase the level of public sector revenues.
Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said the government had expected growth to be resilient in the face of a volatile external environment.
“While we navigate through the turbulence, it is important that we remain focused on our pursuit towards becoming a developed nation, in line with our recent announcement of ensuring shared prosperity for all,” he said.
Country director for Brunei, Malaysia, Philippines and Thailand, Mara Warwick said the government’s priority to instil good governance and integrity in its national development plans were critical enablers for Malaysia’s transition to developed nation status in the next few years.
“In the next 12th Malaysia Plan period, we expect Malaysia to cross the high-income threshold. The government has continuously emphasised it needed to be more than just numbers but rather the quality of life and experience of all Malaysians.
“We are ready to support the government in developing its plan. Malaysia has a long proud history of successful and robust development planning,” she said.
Warwick said the upcoming National Development Plan would likely witness Malaysia’s transition to high-income country status.
“Over the next four years, policymakers and officials from the whole of government will be exploring a wide range of development topics and policy issues affecting this milestone in Malaysia’s development journey, which we anticipate will occur by 2024,” she added.
Record said Malaysia’s gross nation income (GNI) is likely to surpass the threshold at US$12,000 per capita of the high-income nation by 2024.
“Malaysia achieved an average of GNI per capita of US$10,460 as at end of 2018. To ensure greater shared prosperity snd inclusive growth, Malaysia should intensify its efforts to close the gaps between economic opportunities for men and women,” he said.
He said Malaysia will need to invest in the management of human resources in the public service to encourage and develop a more open-transparent environment including those related to technology innovations and digitalisation.
Meanwhile, headline inflation is expected to increase modestly this year, with the effects of transitory policy-related factors dissipating.
The World Bank said the consumer price inflation rate is projected to average at about one per cent this year due to diminishing effects of the changes to consumption tax policy towards the second half of 2019.