Malaysia's economy is expected to see moderate but steady growth despite risks from the escalating trade war between the US and China, said Bank Negara Director of Economics Mohd Fraziali Ismail.

“I think recession fears are overplayed. What we expect is moderate but steady economic growth as compared to previous years,” he told reporters after his talk on “US-China Trade War – Context and Implications” on Wednesday (24 July 2019).

He added that growth may be slower as the economy is entering a mature cycle. For 2019, the central bank forecasts the Malaysian economy to grow between 4.3% and 4.8%. Last year, the country’s gross domestic product (GDP) grew by 4.7%.

Meanwhile, the World Bank has trimmed its 2019 economic growth forecast for Malaysia to 4.6% from 4.7% due to external headwinds arising from US-China trade tensions and weak investment growth.

Fraziali said the trade war between the two major economies has been negative for everyone, especially an open economy like Malaysia.

However, Malaysia was able to cushion the impact as it is backed by a well-diversified export portfolio both in terms of trade partners and products.

“Our diversified exports help mitigate the adverse impact of the trade tension,” he said, adding that Malaysia’s exports outperformed that of regional economies in 2018 despite the trade tension.