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Malaysia’s ETF could stand to benefit if the International Monetary Fund’s (IMF) predictions of a strong 2010 rebound come to pass.

The bad news is that the IMF downgraded the outlook for Malaysia’s economy at large this year. In early 2010, the economy is expected to show signs of improvement that may translate into a 2.5% expansion, explains Tom Barkley for The Wall Street Journal.

External forces are are a factor for the Malaysian economy, with risks stemming from the duration of the global recession, financial markets and commodity prices. The country still has room for an expanded fiscal stimulus, should external forces cause more pain in the economy.

Malaysia’s budget shortfall may rise to 7.7% of gross domestic product this year, from an estimated 4.6% in 2008. Any decision on boosting spending should be made in the medium term because the country faces high budget deficits and rising debt, report Shobhana Chandra and Timothy R. Homan for Bloomberg.

  • iShares MSCI Malaysia Index (NYSEARCA:EWM): up 35.2% year-to-date