Malaysia’s economy is expected to grow by 6.7 percent in 2021 following a projected contraction of 5.8 percent in 2020 caused by the COVID-19 pandemic. This information is according to the latest edition of the World Bank Malaysia Economic Monitor: Sowing the Seeds launched today. The successful containment of the third wave and effective roll-out and distribution of vaccine could lead to a faster-than-expected recovery, firstly, in consumer demand. Secondly, greater investor confidence. Lastly, a more robust recovery in domestic economic activity in 2021
Malaysia is showing signs of recovery by posting a smaller contraction of 2.7 percent in Q3 2020 compared to 17.1 percent in Q2 2020. Fiscal measures like cash transfers and wage subsidies have boosted household spending. Private consumption contracted at 2.1 percent in Q3 2020 compared to 18.5 percent in Q2 2020. 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. The robustness of a rebound in global growth will also influence growth prospects. Containing the pandemic and protecting the most vulnerable remain the topmost near-term priorities.
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, the focus will need to gradually shift from these near-term policies to facilitating necessary economic adjustments to enable new growth in the post-pandemic environment.
Economic Recovery and Long Term Growth on Malaysia’s Agenda
“Seizing new growth opportunities and overcoming potentially long-lasting challenges brought on by the COVID-19 crisis will necessitate bold structural reforms in the medium term,” said Datuk Seri Mustapa Mohamed, Minister in the Prime Minister’s Department in charge of the Economy. “Malaysia needs to take advantage of its recovery from this crisis. Malaysia needs to emerge as a more stable and inclusive economy in a structurally different post-pandemic future. This edition of the World Bank Malaysia Economic Monitor presents a timely analysis. It will help us navigate in planning for a good recovery.”
“The COVID-19 crisis has emphasised the importance of taking a dynamic view of policy in addressing the ongoing crisis. A clear set of strategies for different phases of recovery is needed. These strategies will aid in managing difficult trade-offs between providing relief today and supporting recovery and growth tomorrow” said Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.
The COVID-19 crisis has also drawn attention to the food system and the relevance of food security. The need for food policy to focus on a broader range of risks and opportunities is more important now. The report’s particular focus on the agriculture sector highlights the need for Malaysia to modernise and diversify its agro-food industry. It needs to further integrate it with its more dynamic “farm-to-fork” food economy. This integration will help advance other national priorities, including that of shared prosperity and economic recovery.
Food Security a priority
The 12th Malaysia Plan provides a crucial opportunity to lay out the agricultural sector’s potential. As well as the role of government in facilitating its transformation. In both their aims and approaches, policies deployed should aim to improve a few aspects. Firstly, food security. Secondly, enhance agricultural livelihoods. Thirdly, modernize and inject dynamism into the agro-food economy. And consequentially ensure its resilience, competitiveness and sustainable growth.
In conclusion, Malaysia’s economic recovery seems to be on-track despite political uncertainty and the pandemic.
Visit the link here to download the report.