The Malaysian economy recorded a 5.6 per cent year-on-year growth in the Q1 of 2017. The economy has also a seen 1.8 per cent growth compared to Q4 of 2016. This came as a pleasant surprise as commentators had predicted an uncertain year for the country. A continued growth at 4 to 4.5 per cent up to 2020 is expected. Although the growth looks promising, the Central Bank of Malaysia also reported that this growth had come from debt-driven consumption, which usually is not sustainable.
Inflation, on the other hand, is at a record high of 4.3 per cent in March. The Central Bank believed that this could be temporary as inflation seemed to originate from the supply side. However, many believed that the inflation rate may be much higher and due to the weak ringgit, it is likely that the high inflation rate might persist.
Oil prices; the main determinant of the federal government’s budget; have recovered slightly in January 2017, but have since fallen back down. The Malaysian government’s budget was tabled based on the projection of oil prices at USD45 per barrel and should the prices fall below this value, we might see more challenges ahead.
The only good news we see is that the global economy seems to be recovering, and with the relatively weak ringgit, Malaysian goods are cheaper and more competitive. Malaysia has recorded its highest ever export numbers in March, probably the result of relatively cheaper goods compared to our competitors.
Commentary by Jennifer Wan British Council Malaysia
Although the Malaysian economy seemed to have recovered, the inflation rate and the weak ringgit have not been encouraging factors for parents intending to send their child abroad and many are feeling the pinch with the higher cost of living. With the uncertainty; parents are now taking the wait-and-see approach, thus affecting direct international recruitment. It was also reported that 37,000 people lost their jobs last year.
If the drop in global oil prices continues, we might see even more budget cuts from the government, which again might impact scholarships and funding for Malaysian public universities. The reduction in scholarships announced in early 2016 has already impacted the number of Malaysian students being sent abroad.
With the weaker ringgit, Malaysia’s own educational institutions may be more appealing to Malaysian and non-Malaysian students alike. UK (as well as other foreign) qualifications in Malaysia will be a more affordable option to many and this will affect the recruitment of students to UK. The Malaysian government’s battle with less income and brain drain will lead to more Malaysians being encouraged to ‘stay back’ to study at local institutions.
Direct student recruitment will definitely get more challenging, and we expect to see students and parents looking at more affordable options and routes to higher education overseas. Despite being perceived as expensive, students and parents are still very much in favour of an international experience, thus, transnational education programmes which allows some time spent overseas will be appealing.