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Malaysia expected to maintain its 2024 economic growth outlook at 4.3%

Malaysia expected to maintain its 2024 economic growth outlook at 4.3%

That being said, the country is still deemed an underachiever according to the World Bank's April 2024 update — the East Asia and Pacific region is projected to grow by 4.5% for the year.

According to the World Bank's April 2024 East Asia And Pacific Economic Updatedeveloping East Asia and Pacific (EAP) is growing faster than the rest of the world but slower than before the pandemic. Malaysia in particular is expected to maintain its 2024 economic growth outlook at 4.3%.

Domestic demand will largely continue to anchor growth. That being said, the country is still deemed an underachiever in the report — the EAP region is projected to grow by 4.5% for the year, albeit at a decline from the previous year's 5.1%.

For full comparison, the forecasted GDP growth for selected markets are as follows:

MarketOct 2023 forecast for 2024

Private consumption in Malaysia is also expected to grow by around 5.2%, driven by supportive labour market conditions and continuous household income support measures. While retail sales of most countries surpassed their pre-pandemic levels, the growth trend of retail sales still remains lower than the pre-pandemic rate in most EAP economies.

At the same time, gross exports in Malaysia are projected to rebound by 4.8% in tandem with the expected recovery in global trade. The report also notes that Malaysia continues to face challenges in narrowing fiscal space for the government.

Global outlook

While recovering global trade and easing financial conditions will support economies in the region, the report expects that increasing sentiments towards protectionism and policy uncertainty will hamper growth.

Notably, productivity growth among leading firms in the region has lagged behind that of leading global companies, and the gap is particularly evident in digital-intensive sectors. This is mainly due to the fact that new and innovative technologies typically gain traction first among leading firms, before slowly trickling down to other businesses. This trend raised concern across the business spectrum.

Impediments to competition, uneven worker skills and weak management contribute to lagging productivity growth among firms.

Per the report, productivity growth and the adoption of sophisticated technologies require advanced skills and high-quality digital infrastructure. Still, access to skills and modern data infrastructure is uneven in the EAP — in 14 of the region’s 22 middle-income countries, more than half of 10-year-olds are unable to read and understand an age-appropriate text. Basic digital skills are also not widely available in EAP, with less than a quarter of workers in Cambodia, Mongolia, Philippines, Thailand, and Vietnam able to use the “copy and paste” function in a document.

With this, over 50% of innovating firms in Indonesia, Malaysia, Myanmar, the Philippines, Thailand, and Vietnam cite a lack of managerial and leadership skills as a challenge when hiring new workers (World Bank 2022, Innovation Imperative in East Asia). The average firms in both developed and developing EAP, are on average, less well managed than the US.

Lead image / East Asia And Pacific Economic Update

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