Amid a significant slowdown in foreign demand, the World Bank lowered its projection for Malaysian GDP growth, which is measured by the country’s economy, to 3.9 percent this year from its earlier forecast of 4.3 percent.
However, in its East Asia and Pacific October 2023 Economic Update, which was released on Monday, the bank increased its projection for Malaysia’s GDP growth to 4.3 percent in 2024 from its prior forecast of 4.2 percent.
The country’s economy is projected to be led by a resurgence in global growth, the tourism industry, and anticipated increased oil prices, according to Dr. Apurva Sanghi, the World Bank’s head economist for Malaysia.
“The economy is expected to face significant external risks. Deeper global growth shocks could potentially result in a more significant slowdown than anticipated,” he told reporters at a briefing here.
Given that the country’s economy recovered 8.7% last year, Sanghi claimed that the base effect also influences the World Bank’s projections for GDP growth. As a result, the expansion is expected to decrease in 2023 before accelerating in 2024.
“On the domestic front, key sources of downside risk are linked to uncertainties surrounding domestic inflation. Higher domestic inflation could weigh on the strength of consumption spending. An upside shock to inflation may also prompt further monetary tightening,” he said.
According to Sanghi, if measures are adopted to promote inclusivity, it is anticipated that as the economy grows, poverty and income disparity will continue to decline.
“Meanwhile, around 490,000 Malaysian households remain vulnerable and are grappling with the aftermath of Covid-19. This underscores the importance of having effective and well-targeted social protection programmes.
“The government’s initiative to establish PADU (Pangkalan Data Utiliti Kebangsaan), the national household socio-economic database, as a basis for identifying eligible beneficiaries plays a critical role in ensuring broader coverage and enhanced protection,” he said.