Arjen van Dijkhuizen, senior economist with ABN Amro, takes an holistic approach, arguing that “economic fundamentals make Asia more resilient than other emerging-market regions”.
True enough, Malaysia has a strong external position underpinned by robust foreign-exchange cover and a current-account surplus, albeit one that will shrink from 3% to 4% of GDP in recent years to around 1.2%, the IMF predicts.
However, he also points the finger at Malaysia as one country that is affected by the tightening of financial conditions caused by Trump’s US victory, and expectations concerning an interest-rate rise from the Federal Reserve.
Furthermore, Malaysia is vulnerable to a potential hard landing in China, and has high debt levels which could have repercussions for the banking system, and economic growth which has slowed this year to below the pace in Indonesia.
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