Malaysia’s GDP 2020 growth faces moderate downside pressure

Published on 12 Feb 2020.

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Malaysia’s GDP growth clocked in at 4.3% in 2019, lower than RAM’s forecast of 4.6%. This is mainly attributable to supply-side downward pressure on the agriculture and mining sectors, as well as the slower-than-expected implementation of big-ticket projects last year.

Looking ahead, we have maintained our forecast for 2020 at a cautiously optimistic 4.5% despite notable downside risks. In particular, the rapid spread of the novel coronavirus and its impact on discretionary services and industries such as tourism, retail and F&B may dampen the services sector – the largest sectoral component of GDP. Supply chains, especially those most strongly linked to China, will be affected by temporary factory closures. Exports of goods for both industrial and household consumption will moderate amid more sluggish external demand and lower production. 

The key determinants of the impact of these downside risks are the length and severity of the epidemic. This could shave 0.2 to 0.5 percentage points off our GDP growth projection for 2020. We highlight that this is currently our best estimate of the impact given the still-fluid situation and a lack of confirmed official data.

That said, the potential support from monetary and fiscal policies will play an integral role in sustaining growth momentum. Expedient roll-out of projects as well as accommodative credit conditions are critical to driving growth this year amid such highly uncertain conditions. 


Analytical contact
Kristina Fong
(603) 3385 2511

Media contact
Padthma Subbiah
(603) 3385 2577


About RAM Rating Services Berhad (RAM Ratings)

Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Registration of Credit Rating Agencies, 2011. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 


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