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Brief Overview: Malaysia has been a developing country and its economy as compared to Singapore has not been doing so well, SGD 1 = MYR 3. But with its recent election, the currency has been on the rise with SGD 1 = MYR 2.95. With its recent election and changing of Prime Minister, it is uncertain of what will happen to Malaysia's economy. Will its GDP improve or be worse than before? Will its unemployment rate go up?
Economic Issue 1: Inflation
Economic Issue 2: GDP
Economic Issue 3: Unemployment
Conclusion

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Malaysia is currently having an inflation rate that is relatively favourable, slowing to 1.3 percent in March. However, after the recent Malaysian elections, there are speculations that the inflation rate will rise because of how Mahathir, the new PM of Malaysia, had promised to replace the 6% GST with a sales and service tax instead, reintroduce gasoline subsidies, increase petroleum royalties to oil-producing states and raise minimum wages when he becomes the PM. This will cause the citizens to have a higher real income and hence, be able to spend more. This then leads to demand-pull inflation due to a sudden surge of demand for goods and services,  causing businesses to have to raise the prices of goods and services to determine who to sell the goods and services to due to limited supply of these goods and services in the country.

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INVESTORS are grappling with Mahathir Mohamad's surprise election victory in Malaysia's election.

Here's a look at what it means for the outlook for economic policy and markets.

At 92 years old, Mahathir led a four-party coalition to end the six-decade rule of Prime Minister Najib Razak's party. He inherits an economy that's growing more than five percent, inflation that's subdued and a currency that's been one of Asia's best performers this year.

What were Mahathir's main policy pledges?

Abolishing a 6 percent goods and services tax was a key campaign promise, which Mahathir promised to do within 100 days of taking office. The tax, which was introduced in 2015, is widely blamed by citizens for their rising living costs. The opposition coalition said it would replace the GST with a sales and services tax that's more fair.

The coalition also promised to reintroduce gasoline subsidies, increase petroleum royalties to oil-producing states and raise minimum wages.

What does it mean for the economic outlook?

Malaysia's economy is enjoying a strong rebound at the moment, with growth surging to 5.9 percent last year and forecast by the central bank to reach 5.5 percent to 6 percent in 2018. Most of that recovery has come on the back of a pick-up in global trade and rising domestic demand. But with trade tensions dominating this year, and exports accounting for two-thirds of gross domestic product, there are risks to Malaysia's outlook ahead.

Moody's Investors Service said there's lack of detail on the electoral pledges, but some campaign promises would be "credit negative" for Malaysia. In particular, scrapping GST without any measures to offset the loss in revenue would increase the economy's reliance on oil income and narrow the government's revenue base, the ratings company said. Najib had said abolishing the 6 percent GST would add 416 billion ringgit ($105 billion) to the nation's debt.

A move on GST and a return of fuel subsidies would put pressure on the budget deficit, which Malaysia has steadily brought down to 3 percent of GDP.

Malaysia should also brace for a "sharp slowdown in investment growth" if Mahathir's positioning against Chinese involvement in infrastructure prompts a stalling of those projects, according to Capital Economics Ltd.

Does this change the monetary policy outlook?

The central bank was scheduled to announce an interest rate decision at 3 p.m. on Thursday. After moving early with a January rate hike, economists didn't expect another change anytime soon. All 18 economists surveyed by Bloomberg before the election predicted the benchmark rate would stay at 3.25 percent.

Inflation has been relatively benign, slowing to 1.3 percent in March, with a stronger currency since last year helping to ease price pressures. The government had forecast average inflation of 2.5 percent to 3.5 percent for this year.

Chua Hak Bin, an economist at Maybank Kim Eng Research in Singapore, said he expects the central bank to proceed with its rate decision on Thursday and hasn't revised his call that there'll be no change in the policy position. "You want to ensure continuity" he said.

Bank Negara Malaysia will probably include language in the statement around "ensuring stability" in the ringgit and that they are "monitoring capital flows," he said. The central bank is independent enough that policy shouldn't change, he said.

What does the upset win mean for currency policy?

The manifesto by Mahathir's coalition said it will give a mandate to the central bank to develop a strategy to return the ringgit to its actual potential within three years. Mahathir retains a wariness of currency traders and has warned that he'll be willing to re-introduce a peg on the ringgit to ward off "currency manipulators" if necessary.

The ringgit is the best-performing currency in emerging Asia this year, strengthening 2.5 percent against the dollar.

What does this mean for the stock market?

The uncertainty following the surprise election result will boost volatility and prompt re-positioning of Malaysian assets by investors, analysts said. Christy Tan, head of markets strategy at National Australia Bank in Singapore, said markets are in for a "rough ride as this was the least priced-in scenario" and "while the result is cheered by Malaysians, this means more uncertainties for international investors."

The FTSE Bursa Malaysia KLCI Index of shares is the third best-performing major emerging Asian benchmark this year as the pre-election rally sent the measure to a record high.

With the onshore market closed because of public holidays declared on Thursday and Friday, the knee-jerk selloff could well be more pronounced in offshore trading, according to Tan.

The iShares MSCI Malaysia ETF dropped 6 percent to $32.42 in the U.S., the lowest since December.

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What Mahathir's shock Malaysia win means for economy and markets

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INVESTORS are grappling with Mahathir Mohamad's surprise election victory in Malaysia's election. Here's a look at what it means for the outlook for economic policy and markets. At 92 years old, Mahathir led a four-party coalition to end the six-decade rule of Prime Minister Najib Razak's party.

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Malaysia's GDP has been steadily maintained from 5.5% to 6% from last quarter of 2017 till now. It is expected that this year, Malaysia will heavily rely on the private consumption of the people within the country for the growth and generation of GDP. Due to the recent Malaysian elections, it is expected that the economy might not do as well at first due to policy uncertainties which causes investments into the businesses of the country to decline, but after the first half of the year, it is predicted that the new government can maintain the real GDP of Malaysia, which was also foreseen to be 5.3%.

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Malaysia's growth momentum to continue after election: analysts - Xinhua | English.news.cn

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Malaysia's growth momentum this year is likely to sustain, although some volatility is seen near term after the 14th general election (GE14), said Malaysian analysts Friday.

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Even though Malaysia has one of Asia's lowest unemployment rates of 3.3%, the unemployment rate of highly-qualified youths remains high at 10.8%. This is due to the economy's prolonged reliance on cheap and low-skilled foreign labour, therefore a high amount of jobs goes to foreign workers instead of local graduates. Another reason for the high youth unemployment rate could be that there is a skills mismatch between the skills of local graduates and the needs of Malaysia's economy. Thus, there is a need to make a change to Malaysia's education system to be in line with the current and future needs of the economy so that more youths are able to find jobs that suit the skillsets they have.

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Malaysia's election battle heats up, with focus on jobs for the young

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KUALA LUMPUR - Young Malaysians are being left behind in the nation's economic recovery, a key challenge for an incoming leader needing to push the country out of its middle-income trap. Amid a heated election battle, Prime Minister Najib Razak can boast of having one of Asia's lowest

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In conclusion,  Malaysia is experiencing an improving inflation rate as the increasing inflation is slowing down. However, some speculate that with the change in Prime Ministers, the inflation rate will rise again. Mahathir has plans for the citizens that will help them garner a higher real income, allowing them to have more expenses. This will increase the inflation due to the increased demand of goods and services, causing a lack of these goods and services.
With regards to it's GDP, it has been on a steady rise since last year and is heavily reliant on it's citizens to generate a higher GDP. With the elections just over and a switch in political power, the economy is expected to have a difficult start due to changes in policies causing investments in local businesses to drop. However, the real GDP of Malaysia is expected to be maintained by the new government after the first half.
Despite having a considerably lower unemployment rate compared to other countries in Asia, there are still many highly qualified youths who are unable to find jobs thus causing a higher unemployment rate for able youths. This is caused mainly by the economy's heavy dependence on low skill low cost foreign workers,resulting in a large portion of jobs given to foreign workers instead of local graduates.  The unemployment rate is also affected by the Malaysia's education system as the youths aren't being taught skills suited to the current and eventual needs of the economy, thus the graduates aren't able to find jobs that adhere to their current skill sets causing a large amount of youths to be either unemployed or underemployed.
All in all, Malaysia has a growing economy that can be boosted with the change in governments as the standard of living can be improved, allowing citizens to live more affluent lives, improving GDP. A change in the education by the government can also help the graduates to be more equipped with the skills that adhere to the needs of the current economy, decreasing the unemployment rate in Malaysia.

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Looks like you guys put in quite a bit of efforts to write up the stuff already - so I don't have much to comment or suggest. Well done, and I'm looking forward reading the actual report. :)

Mr Kinya