Malaysia's economic fundamentals remain strong due to its diversified economy, despite the recent downgrade by Nomura Global Markets Research on the Malaysian equity market, says the World Bank.

World Bank Group’s macroeconomics, trade and investment lead economist Richard Record said Malaysia's diversified income stream – from electrical and electronic manufacturing, commodities, natural resources and agriculture – as well as external and domestic demand, would give the country strength.

“In the medium-term, there are challenges around human capital, productivity and governance.

“However, we have seen a lot of movement in the 11th Malaysia Plan Mid-Term Review for 2019-2020, whereby the government is setting out new plans to tackle those issues over the next few years,” he told reporters on the sidelines of the World Bank's 'Globalisation: Contents and Discontents' conference in Kuala Lumpur today.

Record (photo) said Malaysia's economic growth continued to be stable, and the World Bank has projected it to grow at 4.7 percent for 2019.

Meanwhile, economist and Khazanah Research Institute visiting research fellow Jomo Kwame Sundaram said whether a country is doing well, especially an open economy like Malaysia, is subject to many things.

“Rating agencies are notoriously useless. I do not believe in rating agencies, but a lot of people do, or else they would be out of business,” he added.

Jomo was one of the chairpersons for a panel session at the conference today.

On Jan 9, Nomura Global Markets Research downgraded the Malaysian equity market to ‘underweight’ from ‘neutral’ previously, on poor earnings growth prospects and a higher fiscal deficit of 3.9 percent for 2018.

In response to the report, Finance Minister Lim Guan Eng issued a statement on Jan 10, saying that the government was confident of achieving 3.7 percent and 3.4 percent of fiscal deficit in 2018 and 2019, respectively.

"I have checked with the preliminary financial accounts that were closed last year and the government’s fiscal position is well within the 3.7 percent of GDP deficit target for 2018.

“Nomura’s report that the 2018 fiscal deficit would deteriorate to 3.9 percent of GDP is simply untrue,” he added.

- Bernama