KUALA LUMPUR: The Organisation for Economic Co-operation and Development (OECD) has projected the Malaysian economy to grow by 4.3 per cent in 2021 and 6.1 per cent in 2022.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed said this is a big improvement for Malaysia.
"This unprecedented pandemic has forced us to revisit a number of our strategies. Above all, the crisis has highlighted the need for reform.
"The 12th Malaysia Plan (12MP), i.e. the 12th edition of the country's five-year socioeconomic development plan, is a key opportunity for us to put in place the foundations of these reforms,” he said at the launch of the OECD 2021 Economic Survey of Malaysia.
Mustapa said the 12MP, which will be presented to Parliament at the end of September, will set out a clear strategic direction to place the country's economy on a stronger foundation post-pandemic.
"The 12th Malaysia Plan will outline various strategies to build a prosperous, inclusive and sustainable Malaysia,” he noted.
He said that in the initial stages of the pandemic, Malaysia did a good job to contain the transmission of this deadly virus.
For a number of days early last year, the country recorded zero daily cases and zero daily deaths from COVID-19.
"However, in recent weeks, Malaysia’s cases and deaths have spiked up. We are hopeful that things will begin to plateau, and that we can begin opening up even more economic sectors,” he said.
Malaysia’s economy contracted by 5.6 per cent in 2020, one of the worst contractions in recent decades.
"The only way out of this crisis is a rapid vaccination rollout and a gradual reopening of economic sectors. Thankfully, we are progressing well in this regard,” he added.
As of Aug 11, 2021, 40 per cent of Malaysia’s adult population has been fully vaccinated, with hope to reach 50 per cent by the end of the month.
"Once we reach herd immunity, we will continue our efforts in gradually opening up more sectors of the economy, subject of course to standard operating procedures (SOPs) recommended by our health authorities,” Mustapa said.
In its OECD Economic Survey of Malaysia 2021, the organisation said strong sales of electronic goods and health gears are boosting exports and domestic demand benefits from government support.
Malaysia’s private consumption is likely to grow by 3.3 per cent this year and 7.5 per cent next year.
Meanwhile, exports are estimated to surge 10.4 per cent in 2021 and 3.5 per cent in 2022, and imports are expected to grow 10.3 per cent this year and 3.3 per cent next year.
OECD also anticipated inflation to be at 2.7 per cent in 2021 and 1.2 per cent in 2022.
Nevertheless, risks are mostly tilted to the downside, calling for bold macroeconomic policy action in case of need.
It said when the COVID-19 pandemic struck, Malaysia was relatively well prepared thanks to past efforts to build a robust policy framework.
"Over the past decades, Malaysia showed remarkable commitment to improve its economy and address its social challenges.
"This commitment remains intact as shown by the upcoming 12th Malaysia Plan (2021-2025), a stepped-up pivot on further reforms,” it said.
OECD said nonetheless, the shock caused by the COVID-19 outbreak has been severe.
"The government was quick to impose strict restrictions aimed at containing the first wave of infections in March 2020, but this resulted in one of the sharpest gross domestic product (GDP) contractions in the region.
"After managing the second wave, the third wave of infections in 2021 required renewed strict but targeted restrictions. To avoid large economic damages, sizable fiscal stimulus packages have been introduced and monetary policy has been eased,” it noted.
OECD said a series of relief packages amounting to more than 35 per cent of GDP has rescued the most affected firms and workers, thus shoring up confidence.
"Financial support has been well targeted and its implementation has been swift thanks to an established distribution system.
"An emergency job-retention scheme has mitigated the rise of unemployment. A swift vaccination campaign should help avoid new waves of infections, but new outbreaks caused by virus mutations remain possible,” OECD said. - Bernama