World Bank raises its forecast on Malaysia by 14 percent

World Bank has revised forecast on Malaysia with 14 percent raise as it expects the economy here to go by 4.9 percent compared to 3.7 percent in 2023 due to stronger than anticipated performance in the first half of 2024.

“This revised forecast is 0.6 percentage points or 14 percent higher than previously predicted, reflecting robust
growth in consumption, investment, and trade activity,” it said in its Malaysia Economic Monitor Update.

The Malaysian Ringgit have appreciated by 5.3 percent year to date against the US dollar making it one of the strongest performing currencies in the East Asia Pacific region.

There has also been a higher net of foreign direct investment inflow in the second quarter of 2024 that is directed into the services sector.

As for unemployment, the rate is steady at 3.3 percent in the second quarter of 2024. there are concerns over skill related underemployment.

In view of the positive developments, World Bank urged Malaysia to focus on spending efficiency and revenue increment.

“A comprehensive fiscal strategy that enhances government spending efficiency and increases revenue without adversely impacting the poor is crucial for restoring fiscal space to sustainably finance the country’s longer-term spending needs.

“Fiscal reform efforts must be complemented by effective policy communication to secure broad-based public support for reform. ”