KUALA LUMPUR (BERNAMA) – The Economist Intelligence Unit is projecting Malaysia’s gross domestic product (GDP) to expand by 4.4 per cent in 2020, similar to the economic growth recorded last year.
The research and analysis division of the London-based Economist Group, meanwhile, forecast a global GDP growth of 2.4 per cent against the backdrop of continuous tensions due to United States (US)-China trade war and US-Iran conflict in the Middle East, a slight improvement over the 2.2 per cent growth estimated for last year.
The Economist Corporate Network’s Southeast Asia Director Pamela Qiu said a lot of the growth rates in Asia will be quite muted this year but still present a better picture than the rest of the world.
“The good news is that global aggregate growth will improve to 2.4 per cent. It is 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 in a statement yesterday. Despite the US and China signing “phase one” of a trade deal on January 15, 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 Malaysia can reap strong benefits in the automotive and information and communications technology 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,” she said.