Thailand
Malaysia’s GDP set to rebound next year, seen shrinking 6% this year
PETALING JAYA: Malaysia’s economy is forecast to shrink by 6% this year due to the impact of the Covid-19 pandemic, but it will rebound 6.6% next year, according to the Global Economic Outlook report from Oxford Economics.
The report, issued yesterday, said although the nationwide movement control order in Malaysia compounded the economic damage in Q2, the payoff has been apparent, with the pandemic situation currently in hand, which will aid the economy in regaining its footing.
“Malaysia’s exports would benefit from improving Chinese import demand and the electronics cycle.
“Nonetheless, the speed of its recovery will likely be slow given current sluggish global demand, high unemployment and weak investment, and its economy is forecast to shrink by 6% this year, followed by growth of 6.6% in 2021, ” it said.
The report, commissioned by chartered accountancy body, the Institute of Chartered Accountants in England and Wales (ICAEW) said although the recovery movement control order has been extended to Dec 31,2020, almost all sectors have been allowed to operate.
However, only a small number of sectors are still restricted such as night clubs and entertainment centres.
“The entry of foreign tourists has also been restricted. The tourism sector contributes to 15.2% of Malaysia’s national economy with 194 industries involved in the sector’s chain, including service exports, ” it said.
Overall, on its assessment and outlook for the region, the report said the Covid-19 pandemic delivered the largest growth shock South-East Asia has seen since the Asian financial crisis in 1997, and regional growth is forecast to contract by 4.2% in 2020, according to a new report.
It also pointed out while economic activities are picking up again and growth is expected to eventually rebound to 6.4% in 2021, the pace of recovery over the second half of 2020 will vary across the region, depending on the easing of lockdown restrictions and improved export demand.
The Covid-19 outbreak reduced global GDP by around 9% in the first half of 2020, at least three times the size of the 2007-2009 global financial crisis.
Despite a very strong rebound in the third quarter of 6.4%, the report suggests that world GDP will contract overall by 4.4% in 2020.
However, there is momentum building in the second half of 2020 (H2), which will drive growth to 5.8% in 2021, and lead the global economy to recover to its pre-crisis peak by the midpoint of next year, a similar time frame as the post-2008 financial crisis recovery.
The strength of the rebound in economic activity over the coming quarters in South-East Asia remains uncertain, particularly in the fourth quarter of 2020, after the expected initial strong bounce in global trade and domestic activity post-lockdowns has faded.
Additionally, varying success rates in containing the Covid-19 outbreak, and differing lockdown exit strategies will widen the disparities in economic growth in the region.
Economies which have convincingly contained the outbreak such as Thailand and Vietnam will see a stronger recovery than Indonesia and Philippines, which are battling new waves of Covid-19 outbreak after restrictions were prematurely relaxed.
“South-East Asia’s pace of recovery in the second half of 2020 will vary across the region, ” it said.
While growth in Singapore is forecast to contract by 5.7% this year because of a severe decline in global trade, signs of a recovery in exports and imports will see it rebound to 6.1% in 2021.
Heavily export-oriented economies like Singapore and Vietnam will continue to benefit from a stabilisation in trade indicators, shown by recent improvements in exports over the past few months.
The report predicted that recovery prospects looked brightest for Vietnam, which had contained the virus very effectively until recently.
Source: https://www.thestar.com.my/business/business-news/2020/09/22/malaysias-gdp-set-to-rebound-next-year-seen-shrinking-6-this-year