Malaysia’s GDP growth is projected to be between -2.0% and +0.5% in 2020, affected by weak global demand, supply chain disruptions and COVID-19 containment measures both abroad and domestic.
While the Movement Control Order and measures to promote social distancing will dampen economic activity temporarily, they are necessary to contain the spread of the virus.
The Government’s stimulus package will help to cushion the economic fallout.
Both Pakej Rangsangan Ekonomi 2020 and Pakej Rangsangan Ekonomi Prihatin Rakyat as well as the Bank’s financial measures will provide sizable support to households and businesses.
These measures are expected to add 2.8 percentage points to 2020 GDP growth.
Also supporting growth is the ongoing large-scale infrastructure projects, which are expected to provide an additional 1 percentage point lift to growth in 2020.
There remain significant uncertainties surrounding the growth outlook, with both upside and downside risks to the outlook.
Downside risks stem from a more prolonged and wider spread of COVID-19 globally and domestically, recurring commodities supply disruptions and tighter financial conditions following heightened volatility in financial markets.
However, there are also upside risks, emanating from potentially larger-than-expected impact from the pro-growth measures, faster normalisation in activity amid pent-up demand and better-than-expected global economy, arising from the various stimulus measures.
The Bank expects the Malaysian economy to rebound in 2021, in line with the projected global recovery.
The health crisis is rapidly evolving and the Bank will continue to monitor and assess the development of the pandemic and its economic impact.
Source: Bank Negara Malaysia (www.bnm.gov.my)
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