Economic activities to fully rebound by Q3 this year: MIER

Economic activities including trade and investment are expected to fully rebound by the third quarter of 2020 (Q3) and further strengthen through 2021 under the Malaysian Institute of Economic Research’s (MIER) best-case scenario.

Under MIER’s worst-case scenario, production and trade will rebound but only up to 96 per cent -98 per cent by Q4 2020 and into Q1 2021 as well, said the think-tank’s chairman Tan Sri Dr Kamal Salih.

“For both scenarios, we take into account the government’s PRIHATIN total stimulus package of RM260 billion, with the supposition that only 20 per cent of the non-fiscal injection (RM225 billion) will be realised into new capital formation across the economy,” he told an online press conference on the MIER National Economic Outlook 2020/2021 Report today.

Kamal said MIER anticipates Malaysia’s real gross domestic product (GDP) in 2020 to grow by 3.8 per cent relative to 2019 or -0.29 per cent from the 2020 baseline, in line with both Bank Negara’s and World Bank’s expectations.

“In contrast, under the MIER worst-case scenario, real GDP is projected to contract by one per cent relative to 2019 and -4.9 per cent relative to the 2020 baseline.

“For both scenarios, the PRIHATIN stimulus is likely to cushion the decline in GDP by as much as RM50 billion or 3.6 per cent of projected best-case scenario GDP in 2020,” he added.

Meanwhile, MIER projects the Malaysian economy to grow further in 2021 by 4.3 per cent and 5.2 per cent in the best-case and worst-case scenarios respectively, or in real value terms 8.23 per cent and 4.1 per cent 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 subside in Malaysia and world-wide, particularly within Malaysia’s main trading regions,” Kamal said.

Source: Bernama