Kuala Lumpur: The World Bank has cut its target for Malaysia’s gross domestic product (GDP) to 3.9% from 4.3% for 2023 amidst a substantial deceleration in external demand.
Apurva Sanghi, who is the World Bank’s lead economist for Malaysia, said the reason for its downward revision comes as no surprise – anemic global growth and weak external demand as export numbers have contracted by 3.3% and 9.4% in the first two quarters of this year.
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Apurva said it is not just external factors weighing down Malaysia’s growth, it is also domestic factors such as high base effects, lagging effects of rate hikes, and extreme weather events.He noted the dampening effects on spending growth from monetary policy normalisation back to pre-Covid levels, especially on interest rate sensitive sectors.
He also said limited fiscal space remains a key challenge for the economy, and that nearly 490,000 Malaysian households continue to live below the national poverty line and exhibit slower recovery from the pandemic.
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