Malaysia is Southeast Asia’s third-largest economy, registering impressive 5.6% y/y GDP growth in 2012. The economy has traditionally been export-driven—with powerful manufacturing, palm oil, tin and rubber industries—but has increasingly shifted to investment and domestic consumption to help weather external sector weakness in the European Union and United States. The government wields a heavy hand in the economy, directly or indirectly controlling an estimated half of the companies listed on the Kuala Lumpur Stock Exchange (KLSE). Construction and services are the fastest-growing sectors, which have received a boost via public and private investments. However, Malaysia’s proclivity for large public sector and infrastructure projects has had crippling effects on its fiscal stability, with the government running a budget deficit since 1998. Malaysia is also one of the world’s most important Islamic finance and banking hubs, sitting at the helm of the global sukuk bond market.2015 witnessed the beginning of an important transitionary period where domestic politics and economic downturn are testing the fundamental strengths of the economy. In 2015 a political scandal involving an alleged misuse of funds from the 1Malaysia Development Bhd (1MDB) by Prime Minister Najib Razak spurred political and societal infighting amidst sharp declines the value of the ringgit, stock market and exports that are rivaling the declines during the Asian Financial Crisis. This kind of economic and political environment can also resurface animosities between the majority ethnic Malay Bumiputeras and minority ethnic Chinese whose infighting can further frustrate recovery. Nevertheless, we expect to see 4.5% GDP growth in 2016.
FTSE Bursa Malaysia KLCI Index 1,698.94 10.44 (0.62%) 10.44 (0.62%)
As of 4:05 AM EST 2/10/2017
FTSE Bursa Malaysia KLCI Interactive Chart Generated by Bloomberg.com
Price of 1 US$ in Malaysian Ringgit: 4.4440 0.0045 (0.10%) 0.0045 (0.10%)
As of 4:46 AM EST 2/10/2017
Interactive Currency Exchange Rate Chart Generated by Bloomberg.com