Despite optimism that the surge in COVID-19 cases can be contained and lockdowns could be eased, the Malaysian government is expected to cut its 2021 gross domestic product (GDP) growth forecast, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
“We’re in the midst of revising to a lower number and will share the exact number after we get data from the ground,” he said in an interview with Bloomberg TV .
On whether the economic growth forecast may be slashed to about 4%, the minister said it may be “around the range you (the interviewer) mentioned”, reported Bloomberg.
The Malaysian government has already indicated plans to revise the outlook, which currently stands at 6% to 7.5%, in August 2021.
Prime Minister Tan Sri Muhyiddin Yassin faces mounting pressure as lockdowns cost the economy RM1 billion per day and only 10% of the population is fully inoculated against COVID-19. Moreover, the biggest party in his ruling coalition withdrew its support for the Prime Minister.
New COVID-19 cases in Malaysia hit a record 11,079 on Tuesday (13 July), with majority of the cases recorded in the Klang Valley.
“Markets are priced up for a deteriorating economic outlook as the Covid wave shows no signs of subsiding,” said Prakash Sakpal, Senior Economist at ING Groep NV in Singapore as quoted by Bloomberg.
“Making the matter worse for the markets now is the elevated political uncertainty,” he added. Last week, he lowered his 2021 GDP forecast for Malaysia from 5.3% to 4.4%.
Tengku Zafrul was named as coordinating minister for Malaysia’s National Recovery Plan last week, responsible for monitoring the strategy’s implementation.
Although a ramped-up vaccine roll out has allowed for the easing of COVID-19 curbs at seven states, majority of Malaysia remains under lockdown since 1 June.
“Our focus today is for the economy to open safely,” said Tengku Zafrul. “It’s a dynamic and agile plan.”