Analysts believe that the government’s effort to implement stimulus measures will continue to support economic growth in 2H20. — Bernama photo
KUCHING: Malaysia’s real gross domestic product (GDP) growth will likely recovery strongly next year, analysts project, alongside the possibility of more accommodative monetary policy.
Affin Hwang Investment Bank Bhd (Affin Hwang Capital) in its economic update on Malaysia’s Stimulus Package, believed the government’s effort to implement stimulus measures will continue to support economic growth in the second half of 2020 (2H20).
“The country is in preparation for the Revitalise phase of the government’s 6R strategy, where further initiatives will be announced in the upcoming Budget 2021 in early November 2020,” the research firm said.
“As we believe Budget 2021 measures will be expansionary and supportive of economic growth, Malaysia’s real GDP growth will likely recover strongly next year alongside accommodative monetary policy.”
Affin Hwang Capital recalled that Bank Negara Malaysia (BNM) expects the country’s real GDP growth to turn around in the range of between 5.5 per cent to eight per cent projected for 2021. This was after estimating a sharp decline of between 3.5 per cent to 5.5 per cent in 2020, a revision from between negative 2 per cent to positive 0.5 per cent for 2020.
The research firm further recapped MOF recently commented that despite the sharp decline in real GDP growth by 17.1 per cent year on year (y-o-y) in the second quarter of 2020 (2Q20), there was an improvement in growth from April (-28.6 per cent) to June (-3.2 per cent).
According to Affin Hwang Capital, the economy recovered following the re-opening and implementation of the Recovery Movement Control Order (RMCO).
“This was assisted by the Government’s quick action in mitigating the impact through recovery packages and economic stimulus launched in March, April and June, which has supported 800,000 businesses and small and medium-sized enterprises (SMEs) to remain in operations. MOF believes the measures will enable workers and businesses to focus in recovery and help in easing cashflow challenges.
“Furthermore, the recent improvement in Malaysia’s unemployment in June was partially contributed by the Prihatin Rakyat Economic Stimulus Package (Prihatin) and National Economic Recovery Plan (Penjana) measures.”