Bank Negara: Economic and Monetary Review 2019 highlights


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Main points of Bank Negara's Economic and Monetary Review 2019:

* Malaysia’s GDP growth to be between -2% and 0.5% in 2020 (2019: 4.3%).

* Headline inflation to average -1.5% to 0.5% in 2020 (2019: 0.7%) due to significantly lower global oil and commodity prices.

* Domestic economy impacted but necessary global and domestic actions taken to contain Covid-19 outbreak.

* Broad-based restrictions and aversion to travel activities will have a sizeable impact on Malaysia’s tourism sector. Tourism accounts for 11.8% of GDP.

* Production disruptions in global supply chain weigh on the manufacturing sector and exports.

* Private consumption hit by weak labour market conditions, mobility restrictions, subdued sentiments.

* Unfavourable weather conditions and maintenance works will weigh on the production of oil palm, crude oil and natural gas.

* However, domestic growth prospects to improve towards end 2020. Underpinning optimism are projected recovery in global demand and amid continued support from global policy measures.

* Apart from Covid-19 health crisis, economy to be affected by sharp decline and volatile shifts in crude oil prices.

* Crude palm oil (CPO) price relatively sustained, as weaker external demand offset by decline in CPO production.

* Net exports of goods and services to contract due mainly to larger decline in exports.

* Gross merchandise exports to register a larger negative growth. Main factors are weaker global demand conditions due to global pandemic.

* Commodities exports to contract further due mainly to lower prices of crude oil and LNG, weaker commodities output.

* Consumption imports to decline amid slower domestic demand conditions.

* Current account surplus to narrow to 1% to 2.0% of GDP in 2020 (2019: 3.3% of GDP).

* Towards end 2020, economy to benefit from the projected improvement in global demand and as risks from the pandemic subside.

* Domestic growth prospects to improve towards end-2020 and subsequently in 2021.

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