Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive: Shadowed by trade war, Malaysia says 2020 fiscal deficit target a 'challenge'

EconomyJul 22, 2019 05:09AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Joseph Sipalan and A. Ananthalakshmi

KUALA LUMPUR (Reuters) - Malaysia will find it challenging to meet its 3% fiscal deficit target for next year due to uncertainties around the U.S.-China trade war, the finance minister told Reuters in an interview on Monday.

Southeast Asia's third-largest economy is dealing with a debt pile of over 1 trillion ringgit ($243.19 billion), which the administration of Prime Minister Mahathir Mohamad has blamed on mismanagement by the previous government.

Malaysia is also struggling with slowing economic growth, hurt largely by a global slowdown and the trade war between the United States and China - two of Kuala Lumpur's biggest trading partners.

Finance Minister Lim Guan Eng said while Malaysia can meet this year's fiscal deficit target of 3.4%, next year's target of 3% would be harder to meet.

"That will be challenging. Because (of) the uncertainties brought about by the trade war," Lim said.

"There's a time lag effect. The full brunt of it, everyone expects it to hit next year."

Lim said he was "cautiously confident" about meeting the government's full year growth forecast of 4.3% to 4.8%.

The central bank in May warned that weakening global demand and the U.S.-China trade war are raising risks for Malaysia. It cut interest rates by 25 basis points, Malaysia's first since July 2016, amid the growth concerns.

CHINA OUTREACH

Despite the impact on the economy, Lim said Malaysia could benefit from trade diversion from the trade war.

"In the short term, we expect to gain some benefits in the form of business relocation, trade and investment diversion. We are seeing numbers pointing to that," Lim said.

"But in the long term, everyone is a loser. There are no winners."

The finance minister, who met with Chinese officials on his visit to Beijing earlier this month, said China offered more infrastructure investments under the Belt and Road initiative.

"If the pricing is right, we will consider it," he said.

Malaysia will send an investment mission next month to Shenzhen in a bid to attract technology and other companies who might be looking to move their supply chains in light of the trade war, the minister said.

Malaysia will also consider selling panda bonds in China and another tranche of Japanese samurai bonds to raise funds if the pricing is attractive, he said.

Prime Minister Mahathir, who came to power after a stunning election victory last May, had vowed to renegotiate or cancel what he calls unfair Chinese projects authorized by his predecessor.

In April, Malaysia and China agreed to resume construction of a multi-billion dollar rail project after negotiating the cost down by nearly a third.

Lim also said Malaysia and China were in discussions to establish a link between the Shenzhen and Kuala Lumpur stock exchanges, he said.

"This is linking... both in terms of products and infrastructure," he said, adding that it could be finalised in the next six months.

Exclusive: Shadowed by trade war, Malaysia says 2020 fiscal deficit target a 'challenge'
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email