KUALA LUMPUR: Malaysia will continue to deliver robust growth, well-backed by its diversified economy, a wide range of reform initiatives and strong macroeconomic policy frameworks to withstand external shocks, said World Bank Group.
Its Development Prospects group director, M. Ayhan Kose, said the Malaysian economy has been doing well and the real growth rate for 2017 would likely be better than 2016’s.
“Over the longer term perspective, Malaysia has undertaken a wide range of reforms and these had created the type of benefits that you (can) expect in an economy.
“The economy is more diversified today than it was 20 years ago, (with) institutions stronger and so are the macroeconomic policy frameworks. So the potential growth is still at higher respectable level,” he told reporters after a briefing on the ‘Global Economic Prospect’ yesterday.
Last month, the World Bank, in its Global Economic Prospects report, said Malaysia’s gross domestic product growth was expected to grow at 5.2 per cent this year.
Kose said the report also emphasised the repetition of the global crisis history and recession, which these major incidents should have prepared the countries to implement necessary policies to help them weather any such shocks.
“This doesn’t necessarily mean (that) there will be another recession soon.
“At the same time, given the fact that history simply repeats itself, it’s a good idea to get ready to make sure that the financial system is resilient and policy space available to implement the type of policies necessary to stimulate the economy if that type of crisis happens,” he said.
The global financial crisis, which struck in 2007–2008, was considered the worst financial crisis since the Great Depression of the 1930s. It affected many countries worldwide.
Malaysia and many East Asian countries experienced another financial crisis in 1997. It started in Thailand following the baht devaluation after the Thai government decided to break its peg with the US dollar.
Other countries affected included South Korea, Indonesia, Singapore and the Philippines.
On the US economy, Kose said, the World Bank expected the Federal Reserve System (Fed) to increase the interest rate this year, in line with market expectation of three rounds of increases.
“We want the policy to normalise, so the Fed has the space to react if necessary down the road.
“As long as these interest rate increases are gradual and there is robust growth (in the economy), this is a welcome development for financial markets,” he said, adding there was a possibility of faster pace of increase than what the market expected.
He said the US economy would likely register a higher growth rate this year and thus generate spillover effect to the rest of the world, including to this region. — Bernama