Economist: M’sian economy vulnerable to global volatality

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PETALING JAYA: Volatility in Europe, China’s slower economic growth and questions over US growth sustainability are threats to the nation’s economy, the World Bank says.

According to The Malaysian Reserve, the World Bank’s senior country economist for Malaysia, Rafael Munoz Moreno, said uncertainty over the “global economic growth trajectory” was the key risk to Malaysia.

This, he explained, included the slow momentum of growth in Japan and the pace of US economic recovery.

“In addition, the ongoing rebalancing in China’s economy and unexpected shocks to that economy as part of this rebalancing process may affect the Malaysian economy, as China remains a major trade partner of Malaysia,” the financial daily quoted Moreno as saying.

About 13 per cent of Malaysia’s total exports are to China.

Moreno, however, expects private consumption will continue to spur growth. But private investment growth is expected to be moderate due to the less optimistic business sentiment and subdued external demand.

“However, various mitigating measures such as the increase in national minimum wage and BR1M cash transfers as well as salary increment for civil servants are expected to lend support to private consumption.”

Malaysia, he added, needed to hasten structural reforms to manage its finances, stressing that the key for macroeconomic policy was sound fiscal balance with continuous adjustments.