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KUALA LUMPUR, Nov 13 — Malaysia’s economy is on track for recovery even as it is expected to record negative growth in 2020, with the projected positive economic growth for 2021 now at 6.5 per cent to 7.5 per cent, Bank Negara Malaysia (BNM) said today.
In an online briefing today, BNM governor Datuk Nor Shamsiah Mohd Yunus said the recovery for Malaysia’s economy is expected to be buoyed by economic recovery globally as well as mega infrastructure projects locally.
“Going into 2021, Malaysia’s economy is projected to recover and grow within the range of 6.5 per cent to 7.5 per cent. This projection is also in line with other multilateral institutions such as the IMF and the World Bank,” she told the media today.
She noted that the International Monetary Fund (IMF) has projected global economic growth at 5.2 per cent in 2021, and projected global trade to improve by 8.3 per cent in 2021 compared to -10.4 per cent in 2020.
Nor Shamsiah went on to highlight the various factors expected to contribute to Malaysia’s economic recovery.
“Growth in 2021 will be driven by a rebound in global demand. Malaysia’s key trading partners are projected to register better growth prospects in 2021,” she said, noting that the higher external demand is expected to have a positive spillover on export-oriented industries with higher income and higher investment activities expected.
She also said that the gradual globalisation in economic activities would promote strengthening in employment and income prospects, as well as support consumer spending.
“Investment activity is also expected to rebound, supported by strong investment intention in certain segments and continued implementation of large infrastructure projects,” she said, citing projects such as railway lines East Coast Rail Link (ECRL), MRT 2, LRT 3; and the Pan Borneo Highway.
“Finally, growth for the next year will be lifted by higher production from existing and new facilities, particularly in commodity and electrical and electronics (E&E) sub-sectors,” she said.
She noted that industry forecasts suggest that global demand for E&E products are expected to improve significantly in 2021 as shown by a pickup in new export orders, while the continued increase in early stage construction work suggests a recovery in domestic investment activity.
Other than the various projections, Nor Shamsiah also pointed to improvement generally and across the board in key indicators for Malaysia in the third quarter of 2020, which she said reaffirms the projection of a rebound for Malaysia’s economy in 2021.
Some of the positive indicators include better manufacturing figures, growth in exports, improved unemployment figures, and the first positive growth in the wholesale and retail sector since February, with some of these figures benefitting from recovery in global economic conditions.
“We should take note that recovery in the global economy is underway, economic activity has rebounded as most economies gradually reopened, and this has supported the resumption of manufacturing and trade activity. This matters, since pandemic or not, we remain an open economy,” she said.
However, Nor Shamsiah also acknowledged factors that could potentially weigh down on BNM’s forecast for Malaysia’s economic growth in 2021.
“There are however downside risks to our forecast. Our immediate concern is the unpredictable cost of the pandemic, the prolonged international border closures and travel aversions, as well as slower-than-expected recovery in the labour market, particularly for high-touch services sectors could also weigh on growth.
“We are monitoring all these developments and all incoming data closely to evaluate the evolving risk to our economy, monetary and financial conditions. Bottomline — the latest prognosis is that we remain on the road to recovery,” she said.
Malaysia’s economy has recovered from the record low of -17.1 per cent in the second quarter of 2020, to -2.7 per cent in the third quarter of 2020, according to the latest figures released by the Department of Statistics of Malaysia (DOSM) today.
BNM today said it maintains its GDP forecast for 2020 to between -3.5 per cent and -5.5 per cent.
Previously in August, BNM had given a GDP forecast for 2021 of between 5.5 per cent to 8.0 per cent, but its latest figures today for 2021 is a projected range of 6.5 per cent to 7.5 per cent, in line with the Economic Report 2020/2021 figures released last week.