ECONOMIC activities including trade and investment are expected to fully rebound by the third quarter of this year and further strengthen through 2021 under the Malaysian Institute of Economic Research’s (MIER) best-case scenario.
Under MIER’s worst-case scenario, production and trade will rebound but only up to 96-98% by 4Q 2020 and into 1Q 2021 as well, said the think-tank’s chairman Tan Sri Dr Kamal Salih.
“For both scenarios, we take into account the government’s PRIHATIN total stimulus package of RM260 bil, with the supposition that only 20% of the non-fiscal injection (RM225 bil) will be released into new capital formation across the economy,” he told an online press conference on the MIER National Economic Outlook 2020/2021 Report today.
Kamal said MIER anticipates Malaysia’s real gross domestic product (GDP) in 2020 to grow by 3.8% relative to 2019 or -0.29% from the 2020 baseline, in line with both Bank Negara’s and World Bank’s expectations.
“In contrast, under the MIER worst-case scenario, real GDP is projected to contract by 1% relative to 2019 and -4.9% relative to the 2020 baseline.
“For both scenarios, the PRIHATIN stimulus is likely to cushion the decline in GDP by as much as RM50 bil or 3.6% of the projected best-case scenario GDP in 2020,” he added.
Meanwhile, MIER projects the economy to grow further in 2021 by 5.2% and 4.3% in the best-case and worst-case scenarios respectively, or in real value terms 8.23% and 4.1% higher respectively than the 2019 levels.
“With new capital-technology injection and productivity increases, there is scope for a larger GDP growth in 2021 should the Covid-19 pandemic subside in Malaysia and worldwide, particularly within Malaysia’s main trading regions,” Kamal said. — April 23, 2020, Bernama
