The World Bank forecasted Malaysia's RM1.41 trillion economy to grow at 4.7 per cent this year and to slow down to 4.6 per cent for next year. In its January 2019 Global Economic Prospects report titled 'Darkening Skies', the World Bank said Malaysia's lower public investment is weighing on growth, reflecting the completion of several infrastructure projects and a more prudent approach toward new ones.
The bank said in contrast to the regional trend, import growth in Malaysia has been weak, reflecting weak demand for capital goods imports combined with lower imports of intermediate goods. It also highlighted Malaysia had pockets of vulnerabilities, including high levels of public and private debt, external debt, foreign
participation in local-currency sovereign bond markets.
Furthermore, the cost of rising import tariffs may be magnified by Malaysia’s participation in complex global value chains. The report also pointed out Malaysia is among the countries with the highest educational attainment and the lowest share of informal employment at 25 per cent of working population.
What then does the future holds for the economy? As Malaysia’s economic performance has always been tied to the price of oil, the government must be cautious so that lower oil prices do not trigger a significant shift in economic fundamentals. Hence setting a clear vision and economic plan is crucial, especially in providing clarity in terms of strategies and programmes on how to achieve the election manifesto. In addition, the government should put its priorities right to weather the external storms.
Addressing income and wealth inequality is laudable. But before making the distribution of the economic pie more equal and just, the government must find ways to expand the pie. The newly announced new economic model which advocates shared prosperity, with a target to provide a "decent standard of living for all Malaysians" by 2030 regardless of economic class, race, and geographic location.
Aside from overcoming wage and wealth gap, the economic model will also introduce a new economic model for all — to create a more structured economy that is progressive and hinges on knowledge and values with participation from Malaysians across the board.
This shared prosperity model will hopefully turn Malaysia into an important economic axis in Asia moving forward. Yet there are many challenges and pitfalls ahead.
All in all, 2019 and beyond will be challenging for the economy, where uncertainty and volatility will reach a new momentum and norm for at least a few years to come.