The World Bank appears to have maintained its 2024 economic growth outlook for Malaysia at 4.3 percent in its April 2024 East Asia And Pacific Economic Update. World Bank East Asia and Pacific chief economist Aaditya Mattoo said that domestic demand will continue to anchor growth. However, the country is still deemed an underachiever.
Private consumption is expected to grow by around 5.2 percent, being driven by supportive labour market conditions and continuous household income support measures.
Additionally, gross exports are projected to rebound by 4.8 percent in tandem with the expected recovery in global trade.
Meanwhile, the report mentioned that developing East Asia and Pacific is growing faster than the rest of the world but slower than before the pandemic. However, it was also noted that while recovering global trade and easing financial conditions will support economies in the region, an increasing sentiment towards protectionism and policy uncertainty will hamper growth.
One particular section within the update puts greater emphasis on evidence that productivity growth among leading firms in the region has lagged that of leading global companies.
The gap is especially more evident in digital-intensive sectors. This is mainly due to the fact that new and innovative technologies typically gain traction first among leading firms, before slowly trickling down to other businesses. This trend raised concern across the business spectrum
Impediments to competition, uneven worker skills and weak management contribute to lagging productivity growth among firms.
Malaysia also continues to face challenges in narrowing fiscal space for the government. The government recently announced plans to discontinue the pension scheme for new civil servants and its intention to review price controls and subsidies in 2024.
