- Posted August 27, 2014 by
Kuala Lampur, Malaysia
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What impact is Malaysian Growth having on Debt?
In the latest report of World Bank, Malaysian economy looks pretty promising and it is expected that there will be a growth of 5.4% in 2014 as compare to 4.7% in 2013. The figures are quite impressive and will definitely boost investment and exports for the current year. Malaysian economy will experience a boost in growth also due to tightening of the Fiscal and Monetary policies, said the World Bank.
The key shipments of Malaysia, oil and electronics are said to rise in 2014, causing a rippling effect on the overall economic growth. For Southeast Asia, export is the major factor in the fuelling of economic growth. Malaysia will take advantage of the global recovery and a rise in its main ingredients of export.
With exports for the commodity, energy and petroleum prices at rise, there is an increasing risk for high household debt that might result from soaring interest rates. What is disturbing about Malaysia’s growth is the ever rising and one of the highest Household Debt to GDP ratio in Asia.
The household debt in Malaysia was about 86.5% of GDP for the year 2013. Due to this Central Bank is expecting a rise in the interest rates for the Malaysians. Rise in interest will be taking place almost after three years in the Malaysian economy. Reports have shown that the real interest rates have become negative causing the inflation to rise above the expected target of 3%.
Authorities are concerned about soaring household spending and the rising debt that might be the price of inducing economic growth.