KUALA LUMPUR, Aug 14 — MIDF Research has revised downwards Malaysia’s gross domestic product (GDP) forecast to -4.8 per cent year-on-year in 2020 from its projection of -2.1 per cent earlier, as the fallout in the second quarter of this year was significantly worse than predicted.
In a note today, the research house said based on current developments and indicators, the economy is set to improve on a gradual term as sentiments were still weak due to the uncertainty over Covid-19, with other downside risks emerging such as the political situation, rising protectionism and geopolitical tensions.
“Some countries are witnessing the resurgence of Covid-19 cases which caused them to reinstate lockdowns or retract plans to reopen.
“Domestically, the rise in Covid-19 is very localised thus far. However, fears of the adverse situation abroad being echoed in Malaysia is still present,” it said.
MIDF Research said the country’s border which remained shut and the high unemployment (which affects private consumption, the biggest driver of the economy) also contributed to the downward revision.
Nevertheless, it said the stimulus packages and overnight policy rate (OPR) cuts would likely cushion some of the adverse impacts.
Bank Negara Malaysia (BNM) today announced that Malaysia’s GDP fell 17.1 per cent year-on-year in the second quarter this year, far worse than market expectations, and the lowest fall ever recorded since the Asian Financial Crisis of -11.2 per cent year-on-year in the fourth quarter of 1998.
The central bank said this was mainly due to the fact that Malaysia had a nationwide lockdown or movement control order with strict measures in place as public health and safety were the top priority. — Bernama