Malaysia’s economy remains resilient, with the gross domestic product (GDP) projected to grow by 4.4 per cent in 2016 and 4.5 per cent in 2017, according to the World Bank.
The outlook reflects a gradual deceleration in private consumption in Malaysia due to softening of the labor market and continued adjustments to fiscal consolidation.
Private investment is also expected to slow down as commodity prices and global economic growth remain subdued, the World Bank’s Malaysia Economic Monitor, launched yesterday, stated.
The report notes that key risks facing the Malaysian economy stem from commodity price instability and uncertainty over the growth trajectory in the global economy and its impact on Malaysia’s export.
The Malaysia Economic Monitor includes a special focus on the strategic relevance of trade agreements that can help Malaysia implement key economic reforms needed to accelerate the country’s transition to high-income
The World Bank said Malaysia is now engaging in a new generation of regional agreements, including the Regional Cooperation Economic Partnership (RCEP), the Trans-Pacific Partnership (TPP) and the European Union Free Trade Agreement (EUFTA).
“These agreements can help attract investments, spur innovation and technological upgrading, and further open up market access for Malaysia’s exports of goods and services.
“They can also bring benefits through reforms in new areas that were not included in past agreements, such as competition policy, government procurement, investment-state disputes and investment policies,” it added.
The report also said the new trade agreements can advance Malaysia’s reform agenda in four key areas, namely services, investment, competition and small and medium enterprises.
On the services sector, it said Malaysia still trails many countries in East Asia in terms of its contribution to the GDP and exports.
An efficient services market can enhance Malaysia’s competitiveness.
As for the small and medium enterprises, this sector represent 97.3 per cent of firms and accounted for 35.9 per cent of GDP in 2015, but accounts for only 17.8 per cent of exports.
“They are substantially less productive than large firms and it will be critical to address the constraints SMEs face, to raise productivity and reap the benefits of emerging trade opportunities,” the World Bank said.
Meanwhile, Minister of the International Trade and Industry Datuk Seri Mustapa Mohamed in a statement said the new generation of trade agreements can provide the needed impetus to boost Malaysia’s economy to greater heights.
“The 11th Malaysia Plan emphasises competitiveness and productivity ad important ingredients to raise the standard of living of Malaysians.
“These trade agreements can open up market access for goods and services, facilitate new types of foreign direct investment, encourage more competition, provide greater access to skills and technology and create more and better jobs for Malaysian workers,” he said. — Bernama