The International Monetary Fund (IMF) is projecting Malaysia’s real gross domestic product (GDP) to grow at a rate of 9% next year, the fastest among the five major developing economies in ASEAN. The ASEAN-5 – namely Malaysia, Indonesia, Philippines, Thailand and Vietnam – is expected to witness an average GDP growth of 7.8% during 2021, following a contraction of 0.68% during 2020. Malaysia’s economy is forecast to contract by 1.7% during 2020.
The IMF’s 2021 projection for Malaysia is much higher than Fitch Ratings’ growth forecast of 5.8%, and the body has cautioned for extreme uncertainty around its global growth forecast as the world is battered by the global COVID-19 pandemic and oil price crisis.
IMF has also forecast a global GDP growth of 5.8% for 2021, in contrast to 3% contraction for 2020. IMF cautiously anticipates that consumer confidence and sentiment will turn positive by 2021 and Malaysian households will remain financially sound, with better employment conditions and stable incomes during global and domestic economies recovery period. In terms of economic fundamentals, IMF expects Malaysia to continue to grow, supported by the government’s fiscal discipline and fiscal consolidation, a sustainable current account surplus, healthy foreign-exchange reserves as well as manageable inflationary pressure.
Nevertheless, Affin Hwang Investment Bank Bhd stated that no emerging markets, including Malaysia, can escape the downside risks of global recession in 2020, as advanced economies fall into recession. As of now, sovereign rating agencies would continue to monitor Malaysia’s macroeconomic developments, focusing on its economic growth, fiscal deficit and government debt, from the impact of COVID-19 and low global oil price.
(Sources: International Monetary Fund; The New Straits Times; The Malay Mail; The Rakyat Post)