MALAYSIA is still on track to achieving 5.4% economic growth this year, said the World Bank, despite foreign outflow in its local stock market allegedly due to the Pakatan Harapan government.

The volatility seen in the local bourse due to worries over the change in government has subsided, said World Bank Group economist Richard Record.

The outflow of foreign funds is due to external factors that are also affecting other developing countries, not just Malaysia, said Record, who is lead economist at Macroeconomics, Trade and Investment Global Practice.

“I think we did see short term volatility leading up to and around the elections. And this happens in any democracy around the world,” he said, after launching the World Bank Group’s Malaysian economic indicator.

“Much of it has subsided relative to broader market issues that are effecting emerging markets and developing economies right across the world not just Malaysia.”

Critics of Pakatan Harapan have blamed the new government for spooking investors with the declaration that the national debt was RM1 trillion. The former Barisan Nasional government had claimed the country owed RM686.8 billion.

It was alleged that the declaration had spooked foreign investors into selling off their holdings.The outflow of funds from the stock market is reported to be RM 4.23 billion, as of June 18. The amount, however, is still among the lowest among Asean countries such as Thailand, the Philippines and Indonesia.

Other experts have argued that the foreign sell-off was less due to PH than to higher interest rates in the United States and its impending trade war with China.

Record said despite these external challenges, the World Bank Group maintained Malaysia’s economy would still grow by 5.4% this year.

“Our forecast is 5.4% growth in 2018.”

In his speech, he said the Malaysian economy had strong fundamentals with a diverse source of export revenue from manufacturing and commodities. – July 2, 2018.