Page 19 - CMP3

The greater levels of uncertainty led to a divergence in economic performance across countries. In particular, AEs entered into a period of subdued economic growth and low interest rates. Further compounding the AEs’ weak performance were the long-term structural trends of ageing populations and weaker productivity growth. This resulted in emerging market economies (EMEs), particularly in the Asian region, leading global growth, driven primarily by domestic demand and continued economic integration.
Chart 2
DESPITE A CHALLENGING DECADE, ASIA CONTINUED TO BE THE LEADING DRIVER OF GLOBAL GROWTH
10
5
0 -5 -10
Sovereign debt crisis in Europe
Taper tantrum
Oil price shock
Brexit and US-China trade
US election tensions
US election
COVID-19 pandemic and
Dec 10
Dec 11
Dec 12
EMEs
Dec 13
AEs
Dec 14
World
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
ASEAN-5
Asia and Pacific
Source: World Economic Outlook Database, International Monetary Fund (IMF), 2020.
1.1.2 THE DOMESTIC CAPITAL MARKET GREW IN TANDEM WITH THE ECONOMY
Despite the challenging global environment, the Malaysian economy continued on a stable growth path in tandem with the wider Asian region prior to 2020. When the global pandemic hit in the first quarter of 2020, it brought significant economic repercussions arising from the shutdown of businesses, job losses, as well as the reduction in consumer spending and consumer confidence. Overall, the domestic economy grew at an average rate of 5.1% per annum (p.a.) from 2011 to 2019, underpinned by domestic demand and broad-based expansion across most economic sectors (Chart 3) before contracting by 5.6% in 2020 amid the global pandemic. Headline inflation remained low and stable at an average rate of 1.9% p.a. during the period, with inflation expectations being well-anchored.
The stable economic growth supported the growth of debt and equity-based financing in tandem with the increase in investment, characterised by the steady growth of gross fixed capital formation (GFCF) over the years. This was achieved by broadening the capability and capacity of the capital market as well as directing capital towards productive economic activities that ensured businesses, including micro, small and medium-sized enterprises1 (MSMEs) as well as mid-tier companies2 (MTC), continued to obtain access to financing.
MSMEs in Malaysia are defined as companies with annual revenues up to RM50 million or full time employees up to 200 in the manufacturing sector, and up to RM20 million or full time employees up to 75 in other sectors. Source: SME Corporation Malaysia. MTCs in Malaysia are defined as companies with annual revenues between RM50 million and RM500 million in the manufacturing sector and between RM20 million and RM500 million in other sectors. Source: MATRADE.
1
2
CAPITAL MARKET MASTERPLAN 3
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Real gross domestic product (GDP) growth (%)