Malaysia lowers GDP forecast as Covid numbers rise

18 Aug 2021

Malaysia has reduced its economic growth forecast again in 2021, as further Covid restrictions due to a surge in infection numbers are impacting recovery.

Governor of the Central Bank of Malaysia, Nor Shamsiah Yunus said GDP is forecast to grow by 3-4% this year, compared to past estimates of between 6 and 7.5% growth. 

In Q2, Malaysia’s economy contracted 2% compared to the past three months on a seasonally adjusted basis, as per data from the central bank. This reduced the temporary rise and compared it to the average contraction of 1.9% forecast in a Bloomberg poll of economists.

Shamsiah said in a statement: “Malaysia’s growth recovery is expected to resume widely in the second half of the second half of 2021 and improve by 2022.

“The main catalyst for economic resumption and the driving force for positive sentiment is the continued progress and effectiveness of national vaccination programs,” she said, with growth leading to a rise in commodity production and demand. 

Malaysia’s economy grew 16.1% compared to the previous year when the strictest restrictions were in place during the pandemic. The curbs lost the economy an estimated RM1.1 billion ($260 million) each day.

Malaysian Prime Minister Muhyiddin Yassin said last month that the majority of states are due to reopen their doors as early as October. The government said last week it would now focus on hospitalisation figures as the guideline to easing restrictions, rather than daily cases.

At the time of writing there are 1,444,270 coronavirus cases registered in Malaysia, and there have been 13,077 fatalities.