Malaysia Hit By Oil Price Cuts Growth Forecast

Malaysia has cut its annual growth forecast after a sharp fall in oil prices caused the government to revise down its budget plans.

Asia’s biggest oil producer now expects its economy grow by 4.5-5.5% this year, down from a previous estimate of 5-6%.

The fiscal deficit will also be larger at 3.2% of gross domestic product.

Malaysia’s revenues have been hit hard by the collapse in crude prices, which have halved as a result of a supply glut and the weak global economy.

Its currency, the ringgit, has lost about 10% of its value against the US dollar in recent months as dwindling investor confidence has led to capital outflows.

The country is also struggling with one of the highest levels of household debt in Asia, rising prices and a large current account deficit.

However, Prime Minister Najib Razak downplayed concerns that the country could face a possible recession or economic crisis.

“The government has been vigilantly monitoring the situation,” he said in a nationally televised address.

“We are not in crisis. Indeed, we are taking pre-emptive measures following the changes in the external global economic landscape which is beyond our control.”

“This is to ensure that our economy continues to attain a respectable and reasonable growth.”

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza