Malaysia Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Malaysia Country Risk Report
Product Price
$1,195.00

Core Views

  • Malaysia's 2015 real GDP growth came in at 5.0%, slightly above our forecast of 4.7%. Ongoing weakness in the Chinese economy coupled with continued headwinds in the domestic economy will continue to weigh on Malaysia's economic growth. As such, we maintain our 2016 real GDP forecast at 4.5%.

  • We maintain our forecast for Malaysia's 2016 fiscal deficit to come in at 3.1% of GDP, with the government having taken positive steps to increase its revenue and prioritise development projects. While we maintain our constructive outlook on Malaysia's ability to reduce its fiscal deficit, the increase in spending could present downside risks to our view should oil prices fall further.

  • The decision by BNM to keep its OPR steady at 3.25% during its March 9 monetary policy meeting was in line with our expectations, and we maintain our forecast for rates to remain on hold throughout the year. With inflation likely to remain manageable, the central bank will seek to support growth as the country continues to face external headwinds.

  • The MYR has strengthened over the past few months on the back of dollar weakness and commodity strength. As such, we have upgraded our 2016 average forecast to MYR4.100/USD (from MYR4.200/USD) to reflect the change, and believe that an undervalued real effective exchange rate and modest current account surplus should provide support to the currency.

  • The signing of the Citizens' Declaration and Mahathir's resignation from UMNO has strengthened the party's resolve and will prompt it to close ranks and rally behind Najib for survival. With support from the grassroots being key to Najib's power, we expect his position to remain secure for as long as he has the backing of UMNO's division heads, ensuring policy continuity.

Major Forecast Changes

  • We have upgraded our 2016 average forecast to MYR4.100/USD (from MYR4.200/USD) to reflect dollar weakness and commodity strength, and believe that an undervalued real effective exchange rate and modest current account surplus should provide support to the currency

Key Risks

  • Malaysia's economy is relatively well diversified and not particularly at risk from external shocks. The largest threat to the Malaysian economy comes from a rapid unwind of the household credit boom that has taken place over the past few years since the global financial crisis. This has the potential to result in a collapse in domestic demand amid declining property prices. This is not our core view, however, as debt service ratios remain manageable at current levels.

  • Increasing economic dependence with China could also have an adverse effect on the Malaysian economy should the Chinese economy experience an acute slowdown.

Macroeconomic Forecasts (Malaysia 2014-2017)
Indicator 2014 2015e 2016f 2017f
National Sources/BMI
Nominal GDP, USDbn 327.0 296.3 303.0 340.2
Real GDP growth, % y-o-y 6.0 5.0 4.6 5.0
Consumer price inflation, % y-o-y, eop 2.7 2.7 2.7 2.1
Exchange rate MYR/USD, eop 3.50 4.29 3.95 3.90
Budget balance, % of GDP -3.5 -3.2 -3.0 -2.7
Current account balance, % of GDP 4.6 2.7 2.6 2.6
Executive Summary
5
Core Views
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Domestic Headwinds To Continue Undermining Growth
8
GDP By Expenditure Outlook
10
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy And Public Debt Outlook
11
Thoughts On The 2016 Budget
11
Structural Fiscal Position
12
Monetary Policy
12
Rates To Remain On Hold Through H116
12
TABLE: MAIN EXPENDITURE & REVENUE CATEGORIES
12
Monetary Policy Framework
13
Currency Forecast
14
MYR: Remaining Neutral Despite Ongoing Headwinds
14
TABLE: BMI CURRENCY FORECAST
15
Outlook On External Position
16
TABLE: MAIN IMPORTS & EXPORTS
16
TABLE: MAIN IMPORT & EXPORT PARTNERS
16
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
16
Chapter 2: 10-Year Forecast
19
The Malaysian Economy To 2025
19
Productivity Gains To Support 4
19
TABLE: LONG-TERM MACROECONOMIC FORECASTS
19
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Najib Consolidates Power, But Dissent Persists
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
26
Race Relations Still Cloud The Horizon
26
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
TABLE: ASIA - TRADE PROCEDURES AND GOVERNANCE
31
TABLE: IMPORT AND EXPORT DOCUMENTS
32
TABLE: TRADE PROCEDURES BREAKDOWN
32
Chapter 5: BMI Global Macro Outlook
35
Global Macro Outlook
35
Unfinished Business In 2016
35
TABLE: GLOBAL ASSUMPTIONS
35
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
36
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
36
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
37
TABLE: MALAYSIA - MACROECONOMIC DATA & FORECASTS
39

Assess your risk exposure in Malaysia with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Malaysia with confidence.

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  • Delivery of the report in print and PDF
  • Online access for 12 months
  • The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
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  • Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report