Bank Negara: Malaysia on track for 6% to 7.5% GDP growth

• May 11, 2021

KUALA LUMPUR: Malaysia remains on track to achieve the forecast Gross Domestic Product (GDP) growth of between 6.0 per cent and 7.5 per cent in 2021, Bank Negara Malaysia said on Tuesday.

Governor Datuk Nor Shamsiah Mohd Yunus said the growth would be reinforced by the recovery in domestic demand as the index of retail trade turned around to register a positive growth of 9.6 per cent in March 2021 after been in negative territory in the preceding five months.

Gradual improvements in employment and considerable improvements in the external demand would also anchor the economic growth this year, she said, adding that the International Monetary Fund had revised upward the global growth for 2021 to 6.0 per cent in April from 5.5 per cent in January.

Nor Shamsiah reiterated that the growth forecasts for 2021 had already priced in the uncertainties of the COVID-19 pandemic, including potential resurgence in new cases and guided containment measures.

“These uncertainties were reflected by the bank’s wide forecast range of 150 basis points, which is between 6.0 per cent to 7.5 per cent, ” she told a virtual news conference in conjunction with the release of Malaysia’s first quarter (Q1) 2021 GDP performance today.

“Furthermore, the assumptions behind the growth forecasts were also conservative in the sense that there would be no interstate travels until the end of this year and our international borders to remain closed throughout 2021,” she added.

Nor Shamsiah said BNM expected the implementation of the third Movement Control Order (MCO 3.0) would not significantly impact the overall growth trajectory to the extent of the -17.1 per cent growth seen in the second quarter of 2020.

This was due to most economic sectors being allowed to operate with the containment measures imposed by the government, she added.

She also noted the Q1 GDP growth of -0.5 per cent was better than expected despite the imposition of MCO 2.0 earlier this year.

“One important distinction between MCO 1.0 and MCO 2.0 is that all economic sectors were allowed to operate (during MCO 2.0),” said Nor Shamsiah. – Bernama