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

Why you should buy this report

  • 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 Q315 real GDP grew by 4.7% y-o-y, reflecting the economy's slowest growth rate in nine quarters. We maintain our forecasts for 2015 and 2016 real GDP growth to come in at 4.7% and 4.5% respectively, as we expect the both the domestic and external sectors to face continued headwinds over the coming quarters.

  • Although most of the measures raised in Malaysia proposed 2016 budget are largely aimed at tackling short-term problems, the country has retained its commitment to fiscal consolidation, informing our forecast for the deficit in 2016 to come in at 3.1% of GDP.

  • The decision by BNM to keep its Overnight Policy Rate (OPR) steady at 3.25% during its November 5 monetary policy meeting was in line with our expectations and we forecast interest rates to remain unchanged through H116. The central bank will seek to support growth while providing financial stability as internal and external events continue to undermine investor confidence.

  • Despite a weak technical picture, an undervalued real effective exchange rate, modest current account surplus, and positive real interest rates should provide support to the ringgit following its aggressive sell-off of around 20% in 2015. We therefore remain largely neutral on the MYR against the US dollar with a slightly appreciatory bias over the coming years, and forecast the unit to end 2016 at MYR4.1000/USD.

  • While embattled Malaysian Prime Minister Najib Razak appears to have continued to consolidate his position following UMNO's general assembly (8-12 Dec), the aggressive actions used to secure party discipline suggest that he is not as secure as he appears. State elections in Sarawak also mean that existing problems could come to the fore once again during campaigning, with the opposition DAP having made steady inroads.

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 327.0 287.1 287.8 322.4
Real GDP growth, % y-o-y 6.0 4.7 4.5 5.0
Consumer price inflation, % y-o-y, eop 2.7 3.0 2.7 2.1
Exchange rate MYR/USD, eop 3.50 4.29 4.10 3.95
Budget balance, % of GDP -3.5 -3.2 -3.0 -2.7
Current account balance, % of GDP 4.6 2.5 2.4 2.5
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Najib Survives But Faces More Challenges Ahead
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Race Relations Still Cloud The Horizon
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Upgrading Growth But H215 Headwinds Mount
14
TABLE: ECONOMIC ACTIVITY
14
GDP By Expenditure Breakdown
15
Fiscal Policy
16
11MP: Will Hit Hard Targets; Miss Soft Ones
16
TABLE: ECONOMIC ACTIVITY
16
TABLE: FISCAL POLICY
17
Fiscal And Debt Profile
19
TABLE: MAIN EXPENDITURE & REVENUE CATEGORIES
19
TABLE: FISCAL POLICY
19
Monetary Policy
20
Holding Rates In A Bid To Provide Some Stability
20
TABLE: MONETARY POLICY
20
Monetary Policy Framework
21
FX Forecast
22
MYR: Maintaining Neutral Stance With An Appreciatory Bias
22
TABLE: MONETARY POLICY
22
TABLE: BMI CURRENCY FORECAST
22
Balance Of Payments
24
Crisis Risks Overblown
24
TABLE: CURRENT ACCOUNT
24
External Position
26
TABLE: CURRENT ACCOUNT
26
Chapter 3: 10-Year Forecast
29
The Malaysian Economy To 2024
29
Productivity Gains To Support 4
29
TABLE: LONG-TERM MACROECONOMIC FORECASTS
29
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
TABLE: OPERATIONAL RISK
34
Education
36
TABLE: ASIA - EDUCATION RISK
36
TABLE: GRADUATES OF TERTIARY EDUCATION BY SUBJECT ('000)
38
Government Intervention
40
TABLE: ASIA - GOVERNMENT INTERVENTION RISK
40
TABLE: PERSONAL & INCOME TAX BRACKETS
41
Chapter 5: BMI Global Macro Outlook
45
Global Outlook
45
Global Growth Weak As EMs Squeezed
45
TABLE: GLOBAL ASSUMPTIONS
45
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
46
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
47

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.

Your subscription service includes:

  • Delivery of the report in print, PDF and online formats
  • The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
  • The ability to export data and graphs from the online report directly into your workflow
  • The support of a dedicated Account Manager to answer any questions you might have about your subscription
  • 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