KUALA LUMPUR: Caught in the midst of the Sino-American trade war, Malaysia’s economic growth continues to see a downward trend entering 2020.
Economist Datuk Dr John Anthony Xavier said the country’s growth had been adversely impacted by the trade war between China and the United States.
“China is feeling the heat from the (US) tariff spat, so much so that its growth is also sluggish. One-tenth of our trade goes to China and so when China grows slowly, we, too, feel the impact.”
The Universiti Putra Malaysia (UPM) Putra Business School professor said Malaysia, as a trading nation, was reliant on the buoyancy of the global economy, with exports comprising 75 per cent of the country’s gross domestic product (GDP).
Xavier said the economic situation was “sluggish” that the World Bank had revised its outlook on Malaysia’s GDP growth downward from 4.6 to 4.5 per cent next year.
“We are caught in the SinoAmerican, South Korea-Japan trade wars, and the sluggishness of the eurozone economy partly from the uncertainty surrounding Brexit.”
On Monday, the World Bank said Malaysia’s economic performance would be relatively subdued, given the uncertainties around global growth and economic activities.
On a local front, he said, the public’s waning confidence in the government also contributed to the slow economic development.
Xavier said the issue of leadership succession between Prime Minister Tun Dr Mahathir Mohamad and PKR president Datuk Seri Anwar Ibrahim had caused uncertainty among businesses.
“Although Dr Mahathir said he will hand over power to Anwar after the Asia-Pacific Economic Cooperation Leaders’ Summit next year, it is still a long way off.”
He said the economy needed mega projects, but at the same time, was burdened by huge debts.
“There is no good news in the economy. There isaglut in the property market, the stock market is not doing well and foreign direct investment is poor.”
To meet the challenges of Fourth Industrial Revolution, Xavier suggested that the government find ways to increase expenditure reflow to the economy.