KUALA LUMPUR, Jan 21 ― A UN report released yesterday has warned that the ringgit may be dented as the US winds down its easy money policy, causing investors to pull out of the region’s economies, including Malaysia.

As the US winds down its Quantitative Easing (QE) programme and interest rates in the world’s biggest economy eventually rise, investors may pull out of East Asian economies, triggering a capital outflow that would depress the area’s currencies, the World Economic Situation and Prospects 2014 report produced by the UN Department of Economic and Social Affairs said.

“Tighter liquidity conditions and higher global and regional interest rates could pose considerable challenges, particularly for countries with high levels of household rates such as Malaysia, the Republic of Korea and Thailand, ” the report added.

Household debt in Malaysia has grown at around 12 per cent annually each year since 2008. In 2012, household debt rose to 80.5 per cent of gross domestic product. The central has moved to cool credit growth by implementing measures such as limiting the duration of personal loans and mortgages.

In December, ratings agency Standard & Poor’s said increasing levels of household debt in Malaysia would be “problematic” if the country’s growth rate slowed

The UN report said that In the short run, a falling currency may help Malaysia’s export sector,  adding that a mild recovery in the trade sector is expected.

The report projected that Malaysia’s economy, as measured by Gross Domestic Product (GDP), will grow by 4.8 per cent in 2014 and 5.0 per cent in 2015 after growing 4.4 per cent in 2013.

Malaysia’s GDP grew 5.6 per cent in 2012.

The report forecast that China's economic growth will slow to 7.5 per cent in 2014 and 7.3 per cent in 2015 after growing 7.7 per cent in 2013.