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KUALA LUMPUR: Budget 2021 development spending will only give Malaysia’s gross domestic product (GDP) a 4% boost, says Tengku Datuk Seri Zafrul Tengku Abdul Aziz (Photo).
The Finance Minister said this was one of the main factors that the government was projecting economic growth of 6.5% to 7.5% in 2021.
Zafrul said the government was not alone in this estimate, as international agencies such as the International Monetary Fund (IMF), the World Bank, Standard & Poor’s and the Asian Development Bank (ADB) had projections within the same range.
The IMF was the most optimistic, forecasting 7.8% growth, while the World Bank and the ADB estimated 6.3% and 6.5% respectively.
“One of our first assumptions is the availability of a Covid-19 vaccine. We believe its commercialization will be faster and hopefully within the first six months of the year.
“With the vaccine, the global economy will improve and for us, as an open economy, we will see positive results,” he said in a special interview in Wisma Bernama here on Saturday (November 14).
The former banker added that Malaysia was already experiencing an economic improvement due to external demand in the third quarter, which will improve further by 2021.
Malaysia has outperformed most of its regional peers, posting a GDP contraction of just 2.7% in the third quarter.
Singapore stood at -7%, Indonesia at -3.5% and the Philippines at -11.5%.
Zafrul said Malaysia’s economic performance showed a significant improvement with a quarter-on-quarter increase of 18.2% over the second quarter, although GDP is still in contraction mode.
“With a GDP of -2.7%, Malaysia’s achievement was actually the best in the region.
“Other developed countries were also experiencing a contraction in GDP, such as the euro zone, by -4.3% and the United States by -2.9%.
“Our achievement in the third quarter shows an improvement that is in line with the reopening of our economy since May,” he said.
Recognizing that the fourth quarter could be affected due to the conditional motion control order, Zafrul was optimistic that it could be better than the third quarter.
“The retail and tourism sectors are affected. But our export and manufacturing industries continue to function, so our economy will not be affected as it was in the second and third quarters.”
“God willing, the fourth quarter will be better than the third. We will continue to see our economy improve.
“What we should focus on is addressing Covid-19 because the faster we win this war against the pandemic, the sooner we can see an economic recovery,” he said.
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