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World Bank sees Malaysia’s GDP growing 6.7% next year
KUALA LUMPUR: The World Bank expects Malaysia’s economy to grow by 6.7% next year after a projected contraction of 5.8% this year due to the impact of the Covid-19 pandemic.
It said on Thursday the positive factors which could help underpin the recovery would be the successful containment of the third wave of the19 infections.
The World Bank said the effective roll out and distribution of vaccine could lead to a faster-than-expected recovery in consumer demand, greater investor confidence, and consequently a more robust recovery in domestic economic activity in 2021.
Its outlook was contained in the latest edition of the “World Bank Malaysia Economic Monitor: Sowing the Seeds” which was launched on Thursday.
“Signs of recovery are showing with Malaysia posting a smaller contraction of 2.7% in 3Q 2020 compared to a 17.1% in 2Q.
“Fiscal measures like cash transfers and wage subsidies have boosted household spending with private consumption contracting 2.1% 3Q 2020 compared to 18.5% in 2Q.
“However, the recent surge in Covid-19 cases and renewed movement controls could slow recovery down due to uncertainties surrounding the deployment of an effective vaccine and the robustness of a rebound in global growth that will influence the pace of economic recovery, ” it said.
The report pointed out the top most near-term priorities were containing the pandemic and protecting the most vulnerable.
The report expects Malaysia to return to its pre-pandemic trend at a modest pace over the medium term.
As health risks diminish and the economy continues to recover, efforts will need to gradually shift from focusing on near-term policies to facilitating economic adjustments to enable new growth in the post-pandemic environment.
Minister in the Prime Minister’s Department in charge of the Economy, Datuk Seri Mustapa Mohamed said in the statement that seizing new growth opportunities and overcoming potentially long-lasting challenges brought on by the Covid-19 crisis means bold structural reforms in the medium term.
“Malaysia needs to take advantage of its recovery from this crisis to emerge as a more durable and inclusive economy in a structurally different post-pandemic future, ” he said.
Meanwhile, Ndiame Diop, World Bank country director for Brunei, Malaysia, the Philippines and Thailand said the protracted economic impact of the pandemic underlines the importance of adopting a dynamic approach to policymaking.
Hence, a clear set of strategies can be developed for different phases of economic recovery-based on difficult trade-offs between providing relief today and stimulating growth tomorrow.
Diop pointed out the Covid-19 crisis has also drawn attention to Malaysia’s food system and the continued relevance of food security, as well as the need for food policy to focus on a wider range of risks and opportunities.
The World Bank report’s special focus on the agriculture sector highlights the importance of modernising and diversifying the agrofood sector and transforming into a more dynamic “farm-to-fork” food economy.
It said such a transition will help advance other national development prioritiesincluding the boosting of shared prosperity.
The 12th Malaysia Plan, which will be unveiled in January, provides a crucial opportunity to lay out the agricultural sector’s potential and the role of government in facilitating its transformation.
The World Bank said policies deployed should aim to improve food security, enhance agricultural livelihoods, modernise and inject dynamism into the agro-food economy, and ensure its resilience, competitiveness and sustainable growth.
Source: https://www.thestar.com.my/business/business-news/2020/12/17/world-bank-sees-malaysias-gdp-growing-67-next-year