PETALING JAYA: The Malaysian Institute of Economic Research (MIER) foresees a full recovery in economic activity, including trade and investment, in the third quarter this year with further strengthening in 2021 under its best-case scenario projection.
In a statement, it said under the best case scenario, Malaysia’s real GDP in 2020 is likely to grow by 3.8% relative to 2019, or -0.29% from the 2020 baseline.
On the other hand, under MIER’s worst case scenario, production and trade may not fully recover by the fourth quarter of 2020 and into the first quarter of 2021 as well. As such, real GDP is projected to contract by 1% relative to 2019 and -4.9%, relative to 2020 baseline.
“For both scenarios, we take into account the government’s total stimulus package of RM260 billion, with the supposition that only 20% of the non-fiscal injection will be realised into new capital formation across the economy. As the economy plummets under MCO1-3, we further assume a disequilibrium in the Malaysian labour market for 2020 and 2021,” it said in a statement.
In both circumstances, the stimulus package is likely to cushion the decline in GDP by as much as RM50 billion or 3.6% of projected best-case scenario GDP in 2020.
“Under the best-case scenario, the Prihatin package and near full recovery is expected to prevent job losses markedly by 1.05 million (from 1.08 million to 28,600 workers). Meanwhile for worst-case scenario, job losses is projected to decline from 2.41 million to 1.46 million (or 955,266 jobs being protected),” said MIER.
Meanwhile, for 2021, GDP is projected to grow further by 4.3% and 5.2% for best-case and worst-case, respectively.
In real value terms this is 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 subsides in Malaysia and world-wide, particularly within Malaysia’s main trading regions.,” it said.
