The Malaysian economy will pick up next year when the drag from weak external demand wanes and commodity prices improves, says the International Monetary Fund (IMF).
Malaysia is projected to grow at 4.3% this year and 4.6% in 2017, it said in the latest Regional Economic Outlook.
IMF added that while the near-term outlook for Asia remains strong, there were downside risks amid headwinds namely financial dislocations linked with capital flow volatility and sluggish global growth.
A modest growth of 3.1% is expected for the global economy in 2016, which is a slight downward revision since its last outlook in April.
Just two days ago, the World Bank said the slowing economic growth in the United States would affect Malaysia due to its ties with the world’s largest economy.
The impact would be in terms of reduced exports of manufacturing goods, said Sudhir Shetty, the bank’s chief economist for the East Asia and Pacific region.
Ever since oil prices failed to recover, Malaysia has been struggling to keep up with its neighbours. The ringgit in particular has taken a beating, leading losses in Asia with a two-week low today.