The International Monetary Fund (IMF) believes Malaysia’s economy will bounce back this year after being hit very hard in 2020 by the coronavirus pandemic and related restrictions.
Predicting a strong recovery in manufacturing and construction, the IMF said the country’s economy could expand by 6.5 per cent in 2021 but warned that any intensification of the pandemic or rise in global trade tensions could undermine Malaysia’s revival.
Gross domestic product (GDP) contracted by 5.6 per cent last year, according to government estimates, with much of the damage done between March and June when lock downs at home and overseas led to a second quarter GDP fall of over 17 per cent.
The damage would have been greater, the IMF said, were it not for increased pandemic-related external demand for health-related and electronic equipment.
Malaysia makes over 60 per cent of the world’s rubber or medical gloves, while electronics and electrical goods make up almost 40 per cent of the country’s exports.
Prime Minister Muhyiddin Yassin on Wednesday ruled out imposing more lock downs, citing the risk of further damaging what is South-East Asia’s third biggest economy, after Indonesia and Thailand.
Finance Minister, Tengku Zafrul Aziz, said on Thursday that the government would not raise taxes for the time being, in spite of the government aiming to spend the equivalent of around one-fifth of GDP 2021 pandemic recovery.
“Once the economy is recovered, we will see what is the efficient way to have taxes that could help in lifting the government’s revenue,” the minister said. (dpa)
