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KUALA LUMPUR (Nov 13): The country’s gross domestic product (GDP) is expected to recover in 2021 and grow in the 6.5% -7.5% range, said Bank Negara Malaysia (BNM) Governor Datuk Nor Shamsiah Yunus. The projection is similar to that of the Ministry of Finance and is also in line with multilateral institutions such as the IMF and the World Bank.
Despite the lower economic contraction of 2.7% in the third quarter, BNM maintains its forecast for this year’s GDP contraction between 3.5% and 5.5%.
“We recognize that the recent implementation of containment measures due to the resurgence of Covid-19 cases could somehow affect our growth momentum in the last quarter of the year,” said Nor Shamsiah, emphasizing that the current CMCO is not the same as the previous one. CMCO.
“We expect growth to stay within our projected range of -3.5% to -5.5% for 2020, albeit closer to the lower end of the range, as this forecast range has already incorporated the resurgence assumption in the Covid-19 cases, “said the governor at the virtual press conference on the third quarter GDP statistics.
He highlighted that the outlook for next year remains subject to downside risks, noting that the main downside risk to global growth is the resurgence of Covid-19 cases, leading to the reintroduction of measures of containment.
However, he noted that the risk to growth from these resurgences is not expected to be so severe judging by the magnitude of the contraction observed in the second quarter.
“On the domestic front, this is also a risk to our growth prospects. Specific containment measures could weigh on our economic activity in affected states. However, the current target CMCO is not the same as the previous MCO. Almost all sectors can operate, while households and businesses can quickly adapt to standard operating procedures.
“The political response is also gaining ground in supporting the economy. As such, we expect the impact to be less severe than in the second quarter. This is also corroborated by high frequency indicators. We suggest that consumer spending is less affected now compared to the second quarter, ”said Nor Shamsiah.
BNM announced that the country’s GDP contracted 2.7% in the third quarter of 2020 (3Q20) compared to a more pronounced contraction of 17.1% in 2Q20.
Private consumption recovered significantly, registering a lesser drop of 2.1% in 3Q20 compared to 18.5% in 2Q20. “This was supported by a gradual recovery in general income conditions amid the resumption of economic activities. Performance was also improved by the implementation of the stimulus measures, ”Malaysian Chief Statistician Datuk Seri, Dr. Mohd Uzir Mahidin, said at the virtual briefing.
Public consumption expanded to 6.9%, supported by higher public spending on supply and services.
More to come
Read also:
Governor of BNM: the government still has additional fiscal space to support the economy
Malaysia’s GDP contracted 2.7% in Q3 compared to 17.1% in Q2
BNM expects a sustained recovery in private consumption
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