Malaysia might miss its 2020 fiscal deficit target thanks to US-China trade war, says finance minister

The country expects to see some short-term gains in the form of business relocation and trade diversion caused by the dispute, Lim Guan Eng said

But ‘in the long term, everyone is a loser’, he added – though China has offered more infrastructure investments under its Belt and Road Initiative

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Malaysia's Finance Minister Lim Guan Eng. Photo: Reuters

Published: 6:30pm, 22 Jul 2019Updated: 6:30pm, 22 Jul 2019

Malaysia will find it challenging to meet its 3 per cent fiscal deficit target for next year because of uncertainties around the US-China trade war, the country’s finance minister said on Monday.

Southeast Asia’s third-largest economy is dealing with a debt pile of more than 1 trillion ringgit ($243.13 billion), which the administration of Prime Minister Mahathir Mohamad has blamed on mismanagement by the previous government.

Malaysia is also struggling with slowing economic growth, hurt largely by a global slowdown and the trade war between the United States and China – two of Kuala Lumpur’s biggest trading partners.

Finance Minister Lim Guan Eng said that while Malaysia can meet this year’s fiscal deficit target of 3.4 per cent, next year’s target of 3 per cent would be harder to meet.

In the long term ‘there are no winners’ in the US-China trade war, Lim said. Photo: Reuters

“That will be challenging. Because (of) the uncertainties brought about by the trade war,” Lim said.