Malaysian Economic Outlook

Abstract

Prospects for the Malaysian economy in 1999 and 2000 have improved tremendously with the strong showing of recent indicators. The 8.1 per cent real GDP growth in the third quarter gave a concrete indication that Malaysia has rebounded from the recession while the broad-based recovery has increased the chances of sustaining the growth path. The steady recovery is attributed to favourable trade performance, the expansionary fiscal and monetary policies, restructuring in the banking and corporate sectors and also the rebound in business and consumer confidence. Outlook for 2000 appears to be bright as the external demand, especially for electronics, is expected to be maintained. Although the US economy is moderating, Japan and Europe are projected to show improved performance. The recovering Asian region would also support Malaysia's recovery as over 50 per cent of her exports go to the region itself. The impact of the expansionary policy will continue to be felt in 2000 with low interest rates expected to remain for now in view of the subdued inflation rate.