World Bank forecasts 6.7% growth in Malaysian economy next year

KUALA LUMPUR – Malaysia’s economic growth is likely to rebound next year on the back of an effective roll-out of the Covid-19 vaccination programme, continuous export movement, and build-up in consumption and investment.

World Bank Group senior economist Shakira Teh Sharifuddin said the institution expects the first phase of the vaccination programme to be rolled out in the first quarter of 2021.

“Sector-wise, it seems that there has been a pick-up in the manufacturing sector in the third quarter, particularly in the electrical and electronics sector. We see that sectors like agriculture are very resilient.

“Going forward, with the gradual reopening of the economy, we expect the improvement to be broad-based,” she told a press briefing after the launch of the Malaysia Economic Monitor December 2020 report today.

The World Bank projects Malaysia’s economy to grow by 6.7% next year after contracting 5.8% in 2020, subject to numerous factors such as the deployment of an effective vaccine and the robustness of a rebound in global growth.

Notwithstanding a rebound in 2021, Malaysia is not expected to recover fully from the shock of Covid-19 in the next few years, said the bank in the report.

The World Bank said the economic downturn caused by the pandemic and the responding stimulus packages came with a cost, and is expecting Malaysia’s fiscal deficit to widen to 6% of gross domestic product in 2020, while federal government debt has increased to 60.7% of GDP.

Meanwhile, Putrajaya’s revenue is expected to fall to 15.1% of GDP in 2021, straining the government’s ability to respond to future shocks and sustainably finance its longer-term inclusive growth agenda.

“Rebuilding the coffers is something the government should seriously look at, at least in the medium term,” said Shakira.

On Budget 2021, which has been passed in the Dewan Rakyat, she said it will aid economic recovery via several initiatives, including a cash transfer programme for the vulnerable, and upskilling and reskilling schemes.

“This is also the first time that the Budget is aligned with the (United Nations) Sustainable Development Goals.” – Bernama, December 17, 2020