Malaysia's GDP Growth To Moderate In 2019

Malaysia’s gross domestic product (GDP) is expected to grow at 4.4 percent in 2019 on the back of domestic demand, amidst a difficult export environment.

Exports are expected to remain under pressure, with the increase in trade protectionism over the past year unlikely to change any time soon.

Economies in the South-East Asian region started 2019 on a soft note, due to the weakness in global economic activity late 2018. Malaysia was the only country to record positive annual growth for exports; contracting 2.3 percent on the year following a weak outcome (2.2 percent) in November. Data indicates further weakness ahead in the manufacturing and export sectors as Malaysia’s aggregate Purchasing Managers’ Index (PMI) slipped into contractionary territory.

Domestic demand will likely provide some relief, however, there are pockets of concern, with regards to investment growth. Private capex especially in machinery and equipment (M&E) investment, has been on a downward trend in Malaysia. Residential investment will be expected to be held back by demand and supply imbalances. Construction, particularly infrastructure investment, is expected to limit the downside to overall investment. Benign inflation conditions and rising real income growth will also continue to support household spending.