Malaysia’s GDP growth expected to be between -2.0% and +0.5% in 2020

PETALING JAYA: Bank Negara Malaysia (BNM) has projected Malaysia’s gross domestic product (GDP) growth 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.

Governor Datuk Nor Shamsiah Mohd Yunus said in the first half of this year, spillovers from the global slowdown and Malaysia’s own pandemic containment measures will result in large output losses.

“This will take a toll on the economy but it is necessary to keep the pandemic at bay,“ she said at a virtual press conference this morning in conjunction with the release of BNM’s Annual Report 2019, Economic and Monetary Review 2019 and Financial Stability Review 2H2019.

She said the government’s stimulus package will help to cushion the economic fallout. Both the Economic Stimulus Package 2020 and Prihatin Rakyat Economic Stimulus Package as well as BNM’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.

Nor Shamsiah said there remains significant uncertainties surrounding the growth outlook, with both upside and downside risks to the outlook. Downside risks stems from 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.

“Aside from Covid-19 concerns, we can also expect to see continued commodity supply disruptions. The draught last year will affect oil palm yields and maintainence works will hamper production in a number of oil and gas facilities,“ she added.

BNM expects the Malaysian economy to rebound in 2021, in line with the projected global recovery. The health crisis is rapidly evolving and BNM will continue to monitor and assess the development of the pandemic and its economic impact.

The factors that have enabled Malaysia to weather past episodes of shocks are expected to continue to serve the Malaysian economy well. Malaysia will continue to benefit from having diversified sources of growth, economic flexibility, adequate buffers, a strong financial system and robust policy frameworks that have been built over the years.

source https://www.thesundaily.my/business/malaysia-s-gdp-growth-expected-to-be-between-20-and-05-in-2020-DD2207995