Malaysia’s economic growth is expected to recuperate in 2017 and 2018 after recovery in oil prices and manufacturing growth, the World Bank’s Chief Economist for East Asia and Pacific Region Sudhir Shetty said.
Malaysia’s economic growth is likely to slow down to 4.2% in 2016 from 5.0% last year compounded by low crude oil prices and manufactured exports were affected by weaker global demand, he added.
“We anticipate faster trade growth and slight recovery in commodity prices in 2017 and 2018.
“We do see oil prices beginning a slight recovery in 2017 but it is not going back to anywhere near the levels they were in 2014,” he told Malaysian media today via a video conference from Washington DC.
According to the US Energy Information Administration, crude oil benchmarks Brent and West Texas Intermediate fell to US$62 per barrel and US$59 per barrel respectively in December 2014, after reaching monthly peaks of US$112 per barrel and US$105 per barrel in June 2014.
The World Bank sees the decision by the Organisation of the Petroleum Exporting Countries (Opec) to reduce their production of crude oil for the first time in eight years as not affecting the trajectory for oil prices.
“Opec’s ability to affect oil prices is much less now than it was 30 years ago because so much oil comes from non-OPEC producers,” said Shetty.
According to the World Bank’s East Asia and Pacific Economic Update, growth in developing East Asia and Pacific was expected to remain resilient over the next three years, growing at 5.8 per cent this year and 5.7 per cent in 2017-2018.
According to Bernama, the international lender said the region still faced significant risks to growth and countries need to take measures to reduce financial and fiscal vulnerabilities.
It also expects China to continue its gradual transition to slower but more sustainable growth, from 6.7 per cent in 2016 to 6.5 per cent in 2017 and 6.3 per cent in 2018.
Shetty noted the little impact to Asian countries from Brexit in the short term due to marginal trade and financial exposure with the United Kingdom, adding most of the capital flows come from Europe, Japan or the United States.
“We do not know the full impact of Brexit until it actually happens. We now have a clearer sense when Brexit is going to start,” he added.
UK Prime Minister Theresa May has said that she would begin the formal process of leaving the European Union by March 2017.