KUCHING, April 3: Bank Negara Malaysia (BNM) has expected Malaysia’s economic growth to contract sharply this year as compared to a 4.3 per cent growth in 2019.
The central bank said the country’s gross domestic product (GDP) growth rate is projected to grow between negative 2 per cent and positive 0.5 per cent in 2020.
It added that the sharp decline in the country’s economic growth rate was due to global weak demand and supply chain disruption arising from the health crisis of the novel coronavirus (Covid-19).
“The year 2020 is an exceptionally challenging for the global economy. Confronted with an unprecedented health crisis, global growth is expected to contract. As an open economy, Malaysia will not be spared.
“Malaysia’s GDP growth is projected to be between -2.0 per cent and 0.5 per cent in 2020, affected by weak global demand, supply chain disruptions and Covid-19 containment measures both abroad and domestic,” BNM said in a media statement.
This was in conjunction with the publication of the central bank’s 2019 Annual Report, Economic and Monetary Review 2019 and Financial Stability Review for the second half of 2019 today.
BNM believed the country’s economy activity will be temporarily affected by the movement control order (MCO) and measures to promote social distancing, although they are necessary to contain the spread of Covid-19.
It said the federal government’s comprehensive economic stimulus package will help to cushion the economic fallout.
BNM believed both the Economic Stimulus Package 2020 and the Comprehensive Economic Stimulus Package, as well as the central bank’s financial measures, will provide sizable support to households and businesses.
It opined that those measures are expected to add 2.8 percentage points to 2020 GDP growth.
The central bank believed the ongoing large-scale infrastructure projects, which are expected to provide an additional one percentage point lift to growth in 2020, will also support the country’s economic growth.
It pointed out that there are significant uncertainties surrounding the country’s growth outlook, with both upside and downside risks to the outlook.
BNM opined the downside risks could be derived from prolonged and wider spread of Covid-19 globally and domestically, recurring commodities supply disruptions and tighter financial conditions following heightened volatility in financial markets.
Optimistically, it believed the country’s economic growth could potentially gather pace from 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 (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,” it added.
The central bank disclosed that beyond the 2020 economic outlook, the economic monetary review published by BNM also includes a box article on securing future growth through quality investments.
It explained that the article outlines practical strategies to attract quality investments that generate high-skilled employment and high value-added activities.
“It is imperative that policymakers continue to undertake efforts to lift potential growth of the Malaysian economy.
“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,” BNM said. — DayakDaily
