Malaysia

Current Economic Outlook

Malaysia exited recession in Q2 2009 as fiscal stimulus helped private consumption move into positive territory. For the year, RGE expects the Malaysian economy to contract 3.3%, given sharp declines in exports and investment. Consumer and government spending will support growth in H2 2009. If this is complemented by the revival in inventory restocking, industrial activity and exports, economic growth will improve significantly toward the end of 2009. Given RGE’s baseline scenario of a U‐shaped U.S. recovery, Malaysia could be expected to witness a deep U‐shaped recovery, depending on the recovery of exports. RGE forecasts Malaysia to grow 3.1% in 2010. If the U.S. economy falls into a “double‐dip” recession in 2010, Malaysia’s exports and industrial production will take another hit, prolonging the economic slump. RGE attaches a very low probability to the risk of a W‐shaped recession in Malaysia. If the U.S. economy deleverages in the coming years, Malaysia can be expected to get back to 5%‐6% GDP growth rates of recent years only by 2012‐13. Growth prospects will be shaped by government efforts...

Read the latest RGE Global Economic Update.