World Bank maintains growth forecast at 4.3% this year

FILE PHOTO: The World Bank logo is seen at the 2023 Spring Meetings of the World Bank Group and the International Monetary Fund in Washington, U.S., April 13, 2023. REUTERS/Elizabeth Frantz/File Photo

KUALA LUMPUR: The World Bank has maintained its 2024 economic growth outlook for Malaysia at 4.3% in its April 2024 East Asia and Pacific Economic Update on expectation of a likely recovery in global growth and the easing of restrictive financial conditions.

East Asia and Pacific chief economist Aaditya Mattoo said domestic demand will continue to anchor growth, and Malaysia is also set to benefit from the recovery in the export market.

Private consumption is expected to grow by 5.2% from 2023’s 4.7%, driven by supportive labour market conditions and continuous household income support measures.

In addition, gross exports are projected to rebound by 4.8% from a contraction of 7.9% last year in tandem with the expected recovery in global trade.

“Given Malaysia’s exposure to China, the slowing growth in China is going to be a problem.

“But in general, Malaysia is going to benefit from what is referred to as the technology cycle, which boosts electrical and electronics exports; and it is already benefiting from the significant relocation of semiconductor production from China,” he said yesterday.

According to Mattoo, China’s growth is projected to moderate to 4.5% this year from 5.2% in 2023 amid near-term problems such as high debt and a weak property sector, on top of its longer-term challenges such as ageing and trade frictions.

Slowing China’s growth is set to drag economic expansion in developing East Asia and Pacific, which is forecast to decline to 4.5% in 2024 from 5.1% last year.

Excluding China, growth in the region is estimated to pick up to 4.6% this year, up from 4.4% in 2023.

In the longer term, he expressed optimism that China’s growth will be sustained and higher once it negotiates these difficult transitions. As for Malaysia, he said the nation has tremendous potential to improve its economy and should not be satisfied with the current growth rate.

“Malaysia is a country which has under-achieved and has tremendous potential,” he said, stressing that the country needs to address rising household debts which squeeze consumption,” said Mattoo. — Bernama