Malaysian budget could face further revision

Significance

Government spending cutbacks due to falling oil revenues have underscored Malaysia's deepening economic malaise. Weak export demand and tightening credit could keep growth for 2016 at 4%, despite signs of a tentative recovery in manufacturing output and a rise in some commodity prices.

Impacts

• Road and transport infrastructure upgrades will be central to development spending.
• Other budget revisions (if oil falls further) could see infrastructure projects delayed or cancelled.
• Political factors will help protect investment in ethnic Malay and rural areas.