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Emerging Malaysian Market Expects To Grow 4.4% In 2020

Kuala Lumpur, 20 January 2020 - The Economist Intelligence Unit is projecting Malaysia gross domestic product (GDP) to expand by 4.4% in 2020, similar to economic growth in 2019.

The business intelligence unit of London-based media company The Economist Group is also projecting global GDP growth to improve marginally by 2.4% this year, against the backdrop of continuous tensions due to U.S.-China trade war and U.S.-Iran conflict in the Middle East.

Pamela Qiu, South-east Asia Director of The Economist Corporate Network said, “A lot of the growth rates in Asia are going to be quite muted, but still presents a better picture than the rest of the world. 

“The good news is that global aggregate growth will improve to 2.4% it's good news, but if you dig below the surface, our analysis shows that the reason is not because of expanding economies, but because recessions in emerging markets like Argentina and Venezuela are getting shallower,” she said.

Qiu was speaking at the Economic Outlook 2020 session organised by InvestKL, an investment promotion agency under the Ministry of International Trade and Industry, here today.

The event also featured a fireside chat with Minister of International Trade and Industry Datuk Darell Leiking, who later fielded questions from an audience of C-suites from multinational investors.

Despite U.S. and China signing “phase one” of a trade deal last week on January 15, 2020, Qiu does not expect the trade war to come to an end in the next 12 months.

“We do not think that the phase one trade deal was a groundbreaking deal. Many of the issues that were discussed for months revolved around agriculture products and currency, which China had already explicitly stated that they will agree to.

“One positive from the phase one deal is de-escalation of the threat of even more tariffs, but it does not fundamentally change the picture of the tariff situation, nor of the strategic competition between the two countries,” she commented.

However, Qiu noted that Malaysiacan reap strong benefits in the automotive and ICT sectors, as investors look to relocate from China in response to trade war tensions.

“Malaysia has a lot of inherent advantages when it comes to infrastructure. While Vietnam is facing supply chain capacity constraints, Malaysia does not have as much of a problem due to its land capacity. 
“Malaysia also has a large English-speaking population to help support its workforce. In addition, you have a very strong history of automotive manufacturing and ICT manufacturing which you can build on,” Qiu said.

Minister of International Trade and Industry Datuk Darell Leiking said Malaysia has to invest in more research and development (R&D) in the agricultural sector.  “We have vast land, and were once a major agricultural producer. In Sabah, we are seeing businesses planning to produce avocado and industrial hemp.”

The minister pointed to Qatar turning into a dairy exporter as a response to being embargoed by Saudi Arabia and its allies over the last three years. 

“With technological advances, Qatar has innovated its dairy industry and are now able to produce 30-40 litres of milk per cow daily, compared to Malaysia, which is still at 15-20 litres per cow daily,” Leiking remarked.

He added.“In Malaysia, we in the government will continue to introduce financial incentives for businesses that put R&D at the forefront, towards increasing manufacturing productivity and export capabilities.”

In his remarks to close the session, InvestKL Chief Executive Officer Muhammad Azmi bin Zulkifli said, “There is a lot of focus on countries catching up to us such as Vietnam. Together, we should change our mindset to focus on catching up to countries that are ahead of us such as South Korea, Japan, and the United Kingdom.”
Source: InvestKL