World Bank Lowers Malaysia's 2019 GDP Growth Forecast to 4.6% as Global Risks Heighten
The World Bank has lowered Malaysia's gross domestic product (GDP) forecast to 4.6% in 2019 to reflect unresolved trade tensions, a sharper-than-expected slowdown in larger economies as well as market volatility, which it said will pose risks to growth in the near term.
The bank earlier maintained its forecast on Malaysia at 4.7% back in April.
In a new report released on 1 July 2019, it said given the uncertain external environment and subdued business confidence, policy actions should aim to strengthen fiscal buffers, facilitate private investment and ensure adequate social protection for lower-income households.
Over the past year, it said Malaysia's fiscal consolidation has been largely driven by expenditure rationalisation. Going forward, the report recommends reforms to mobilise public sector revenues to both diversify away from unstable oil-related revenues and to support future public investment.
"Presently, Malaysia's revenue from personal income taxes and consumption taxes both fall well below the average levels seen in other upper-middle-income economies and high-income countries. Reforms to widen the tax base should be accompanied by measures to expand and improve the existing social protection system to boost resilience and protect the vulnerable."
"Current plans to move towards a targeted fuel subsidy framework would bring savings that could be used to expand core social welfare programs," it said.
And while Malaysia's public service performs well by regional standards, the World Bank notes that it falls short relative to advanced economies, particularly in terms of openness and transparency.
"For the public service to fully realise its potential, Malaysia will need to invest in human resources management; to encourage and develop a more open, transparent environment; to undertake reforms to attract, manage and retain the best talent, and to embrace new and emerging trends, including those related to rapidly-evolving technological innovations and digitalisation," it said.