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.”