Bank Negara foresees all states to move to NRP Phase Three at least by Nov 2021; economic outlook to improve in 2022

Bank Negara Malaysia says all states are expected to transition at least to Phase Three of the National Recovery Plan (NRP) by November this year. — Picture by Ahmad Zamzahuri
Bank Negara Malaysia says all states are expected to transition at least to Phase Three of the National Recovery Plan (NRP) by November this year. — Picture by Ahmad Zamzahuri

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KUALA LUMPUR, Aug 13 ― All states are expected to transition at least to Phase Three of the National Recovery Plan (NRP) by November this year, Malaysia’s central bank said today.

Three that are currently in Phase Three ― Perlis, Sarawak and Labuan ― should segue to Phase Four, the final phase of the recovery plan at that time, Bank Negara Malaysia (BNM) added.

BNM governor Datuk Nor Shamsiah Mohd Yunus said faster vaccination rates and lower Intensive Care Unit (ICU) utilisation will enable the relaxation of containment measures, with full transitions into Phase Three by October and Phase Four by November.

“Malaysia’s growth recovery is expected to broadly resume in the later part of the second half of 2021 and improve going into 2022.

“A key catalyst for economic reopening and a driver of positive sentiment will be the continued progress and effectiveness of the national vaccination programme, which would alleviate the strain on healthcare system capacity and allow for the relaxation of containment measures,” she said at the virtual launch of the Malaysia Economic Performance Second Quarter 2021.

However, Nor Shamsiah also pointed out that conditions varied from state to state, including the vaccination rate and ICU bed occupancy.

“Hence different states are expected to transition at differing times. States with low ICU utilisation and faster vaccination are expected to transition faster and earlier into Phase Four.

“However as vaccination rates improve, transition to subsequent phases will be shorter. With a baseline assumption that existing vaccines are effective against prevalent variants resulting in lower ICU utilisation, all states are expected to transition to Phase Three by October and Phase Four by November,” she said.

She also said growth prospects in the third quarter of this year will be weaker due to continuation of containment measures imposed by the government, but are expected to improve in the fourth quarter.

“On the external front, strong global demand conditions particularly in major trade partners and tech upcycle will support exports and production activities.

“On the domestic front, a rapid vaccination rate will allow gradual relaxation of containment restrictions and enable resumption of economic activities.

“Ongoing support for businesses and households as well as continuation of large-scale infrastructure projects will be key factors underpinning growth factors in 2021,” she said.

The NRP announced on June 15 set four phases for Malaysia’s pandemic exit. The transition from one phase to another is based on three benchmarks: the number of new Covid-19 cases with serious symptoms, ICU bed occupancy, and the percentage of fully vaccinated adult population for each state.

The full presentation of the Malaysia Economic Performance Second Quarter 2021 can be accessed at BNM’s official website here.

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