KUALA LUMPUR (Aug 8): Malaysia is expected to weather a mild US recession, thanks to its diversified exports and robust domestic demand, the Socio-Economic Research Centre (SERC) said on Thursday.

Historical data suggests that a 1% decline in US gross domestic product could lead to a 0.3 to 0.5 percentage-point decline in Malaysia's economic output, said SERC executive director Lee Heng Guie said at a media briefing.

Malaysia’s strong economic fundamentals and the government’s ongoing initiatives for the country are expected to cushion the blow of a potential further downturn in the US economy, said Lee.

“Although Malaysia is an open-economy country, we also have domestic strength,” Lee said. “Plus, the government is doing some good things to mitigate the pressures — and overall, I think Malaysia will still grow.”

Global markets, including Malaysia’s, are already reeling from fears of recession in the US. JPMorgan Chase is now predicting a 35% chance that the US economy will tip into a recession by the end of this year, up from 25% as of the start of last month.

However, SERC’s Lee warned of further risks and challenges to the global economy at a time when China, the world's second-largest economy, is also experiencing a slowdown in its economic growth.

“So if these two are not doing good, the global growth will also go down — unfortunately with the continuous trade war and the crisis in the Middle East, there are still a lot of risks and challenges to the global economy,” he added.