While Malaysia’s gross domestic product (GDP) declined by 0.5% in the first quarter of 2021 (Q1 2021), it remained on track to hit the 6% to 7.5% growth forecasted by Bank Negara Malaysia (BNM) for this year.
BNM Governor Datuk Nor Shamsiah Mohd Yunus said the growth performance was mainly supported by the “improvement in domestic demand and robust exports performance, particularly for electric & electronic products”, reported The Sun Daily.
Overall, Nor Shamsiah expects the growth recovery to benefit from better global demand, continued policy support and increased public and private sector expenditure. The recovery will also be seen in the labour market conditions, hiring activity forecasted to increase gradually.
Looking ahead, the governor believes the higher production from new and existing manufacturing facilities as well as oil and gas facilities would provide further impetus for growth.
The roll-out of the COVID-19 vaccine is also expected to lift sentiments as well as contribute to economic recovery. The governor, however, acknowledge that the pace of recovery across economic sectors will be uneven.
“Going forward, Malaysia is well positioned to continue benefiting from stronger global economic and trade activities. While the growth outlook continues to be shaped by developments surrounding the pandemic, the implementation of containment measures which are mainly aimed at curbing social activities and allow almost all economic sectors to operate, would minimise the impact on economic activity,” said Nor Shamsiah during the central bank’s virtual briefing on the country’s Q1 2021 GDP performance.
With almost all economic sectors allowed to operate, MCO 3.0’s impact on growth will likely be less severe compared with last year’s MCO 1.0.
Nor Shamsiah reiterated that the central bank’s GDP forecast range for this year is mindful of the uncertainties brought about by the pandemic, such as the potential resurgence in COVID-19 cases and stricter containment measures. In fact, this uncertainty is evident in BNM’s wide forecast range of 150 bps, between 6% and 7.5%.
“Furthermore, the assumption behind the growth forecast was also conservative, as it had projected no interstate travel until the end of this year and Malaysia’s international borders will remain closed to leisure travel throughout 2021,” she explained as quoted by The Sun Daily.