Malaysia Economic Monitor, June 2017

Abstract

Malaysia’s economic growth expanded strongly in first quarter (1Q) 2017. Gross domestic product (GDP) growth rate for 2017 is expected to accelerate to 4.9 percent, slightly above the government’s current projection range of 4.3 to 4.8 percent. The current account surplus has declined (1Q 2017: 1.6 percent of GDP; 4Q 2016: 3.8 percent of GDP) due to strong import growth. Gross imports growth, mainly of capital and intermediate goods, outpaced the significant increase in gross exports, resulting in a lower goods surplus. The current account surplus is projected to narrow further to 1.6 percent of GDP in 2017. Monetary policy is expected to remain accommodative and supportive for growth. The higher growth trajectory projected for 2017 opens up room to accelerate reduction in the fiscal deficit. Risks to the economy in the short-term stem mainly from external developments. Focus on implementing further structural reforms to raise the level of potential growth should continue. This include looking into measures to raise the level of productivity, encourage innovation, invest in new skills, leverage digital technologies, and continue ongoing efforts to improve efficiency of public service delivery.