ON Aug 31, the Finance Ministry released a pre-budget statement for the first time in the country’s history. Research for Social Advancement (Refsa), a not-for-profit think tank that promotes social advancement in Malaysia, views this as a step forward in promoting transparency and reducing uncertainty in fiscal policy.
The ministry has rightly adopted a cautiously optimistic approach in its macroeconomic outlook for 2021/22 in line with Bank Negara Malaysia’s downward revision of its GDP forecast to between 3% and 4% for 2021. Nevertheless, it is important to reiterate that the country’s economic recovery for 2021 and beyond is strongly predicated on an improvement in the domestic pandemic situation. Malaysia’s solid export performance alone cannot guarantee a comprehensive recovery as long as consumption remains subdued due to the long lockdowns and lack of a robust pandemic exit strategy besides vaccination.
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