Country Economic Forecasts > Malaysia

The MYR has been the worst performing Asian currency this year, falling nearly 22% against the US$ at its weakest point at the end of September. The size of the drop reflects a number of domestic factors a flagging economy, a narrowing in the current account surplus, high levels of indebtedness and a major political scandal as well as the wider concerns affecting many emerging markets. The prospect of a sharply lower MYR (pushing up import prices and eroding purchasing power), higher borrowing costs and continuing political uncertainty will further undermine an economy that is already expected to slow in response to less robust consumption and investment trends, over-indebtedness and weaker external balances.Against this uncertain and subdued backdrop GDP growth is forecast to moderate during H2 2015 and slow further in 2016. We expect GDP growth of 4.7% in 2015 and 3.9% next year.