PETALING JAYA: The government’s swift move in rolling out stimulus measures has helped to save the national economy from a worse slump in 2020, amid the Covid-19-induced crisis.
According to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, (pic) the government’s four economic stimulus packages amounting to RM305bil or 20% of gross domestic product (GDP) are estimated to have contributed four percentage points to last year’s economic growth.
In 2020, Malaysia faced its worst recession since the 1998 financial crisis, with a full-year contraction of 5.6% as growth across all economic sectors – except for manufacturing – declined significantly.
However, Tengku Zafrul pointed out that the country’s GDP performance in 2020 fared better than the projections by international organisations such as the International Monetary Fund (-5.8%), the World Bank (-5.8%) and the Asian Development Bank (-6%).
He added various signs of economic recovery were recorded in 2020.
These include a sharply-lower GDP contraction in December 2020 as compared to a month earlier and a lower unemployment rate of 4.8% in the fourth quarter in comparison to the highest unemployment rate of 5.3% in May.
Meanwhile, the fourth quarter also saw a 4.4% growth in net financing through increased issuance of corporate bonds.
In addition, the finance minister said that working capital requirements as well as the purchase of passenger cars and residential properties continue to increase loan disbursements to the people and businesses, reflecting a good recovery in demand.
“The country’s fiscal discipline, sustainable medium-term growth prospects and effectiveness of government measures in curbing the spread of the Covid-19 pandemic have been recognised by the international credit rating agency, Moody’s, which has maintained Malaysia’s A3 rating with a ‘stable’ outlook in January this year.
“Overall, Malaysia’s financial position and prospects remain strong despite the challenging global credit rating assessment cycle throughout 2020, ” he said.
Looking ahead into 2021, Tengku Zafrul said the implementation of Budget 2021 initiatives and the Permai assistance package worth RM15bil, are expected to mitigate the impact of the ongoing movement control order.
“The government is also confident that the systematic and effective implementation of the national Covid-19 immunisation programme will encourage the re-opening of various economic sectors, restore consumer sentiment as well as boost Malaysia’s economic growth and resilience, ” he said.
According to Tengku Zafrul, several priorities for economic recovery efforts have already been identified and will be considered as part of the planning for Budget 2022. These efforts include:
> Continuing large-scale projects such as the East Coast Rail Link, MRT2 and LRT3 as well as other projects with high-multiplier effects;
> Strengthening the country’s revenue base, starting with regulating the shadow economy;
> Implementing the Medium-Term Revenue Strategy which includes diversifying the economy’s fundamentals, improving tax framework as well as promoting value-add within the commodity sectors;
> Re-examining the generation of various economic sectors’ revenue holistically through the Environmental, Social and Governance (ESG) lens;
> Improving human capital policy to ensure local talents are ready for the future, in preparation for challenges in the digital age; and
> Building capacity along the whole supply chain of certain sectors such as agricultural technology, education and artificial intelligence, and strengthening the country’s entrepreneurial culture.
“The government has also embraced several of the United Nations’ Sustainable Development Goals in Budget 2021 as a start towards providing a holistic blueprint towards inclusive socio-economic development, as well as more sustainable environmental management.
“All these efforts will be coordinated to achieve a more robust and sustainable GDP growth through a strategic, targeted, on-point and outcome-based medium-term economic plan, ” Tengku Zafrul said in a statement.