Malaysia Economic Factors and Its Impact

Domestic drivers are expected to play a leading role in positively influencing business performance in 2019. 

 

Confidence in policies introduced by the government to address economic issues and combat corruption represents the single largest positive factor that accountants and finance professionals believe will drive business performance in 2019. More than two-thirds expect business performance to potentially improve with more business-friendly policies and ethical business conduct across the market. 

 

However, as reflected in chart 3, one-third of respondents are concerned that changes in government policies could have a detrimental effect on future business performance. 

 

Malaysia has enjoyed a sustained period of economic growth for the past few years and this represents the joint-second most important factor in driving business performance in 2019. The Ministry of Finance (MOF) projects the GDP growth for Malaysia in 2019 to be 4.9%, up 0.1% from 2018. 

 

While the World Bank recently adjusted the projected economic growth of Malaysia to 4.7%, it regards Malaysia’s economic fundamentals as remaining strong due to its diversified nature.

 

 

A weak ringgit is ranked equally important for economic growth. As one of the most open economies in the world, with a trade to GDP ratio averaging over 140% since 2010, the value of ringgit would clearly influence export competitiveness and earnings of companies with significant foreign currency-denominated revenue. 

 

Slightly more than one-third of respondents expect an increase in consumer spending to positively impact the economy in 2019. This is in line with private consumption being a significant driver of the economy which has grown by 10.9% and 9.0% over the last two years. 

excerpt from Business & Economic Outlook 2019 Report ( MIA & ACCA )

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