THE growth momentum seen from July to September is expected to set the foundation for Malaysia’s gross domestic product (GDP) to grow by up to 7.5 per cent next year, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
However, he cautioned that this would hinge heavily on the next phase of the government’s 6R Strategy — Revitalise — as represented by the 2021 Budget.
“As a strategic plan for ensuring Malaysia’s growth in the coming year, the 2021 Budget seeks to balance healthcare capacity needs while building upon the current economic recovery momentum together and developing better resilience for the future,” he said in the Economic Outlook 2021.
The government had crafted its unique 6R Strategy comprising six stages — Resolve, Resilience, Restart, Recovery, Revitalise and Reform — to help the nation cope with the Covid-19 pandemic.
This came after the Movement Control Order (MCO) was instituted to contain the spread of Covid-19 infections.
The country, said Tengku Zafrul, had lost an estimated RM2 billion each day while the MCO was in effect.
Against this background, the government put together no less than four stimulus packages in record time to protect lives, business and the economy.
Hence, the RM250 billion Prihatin Rakyat Economic Stimulus Package was born, incorporating a RM25 billion fiscal injection.
Three additional packages followed, namely Prihatin SME+, Economic Recovery Plan (Penjana) and Kita Prihatin in April, June and September, respectively.
All four packages amounted to RM305 billion, or 21 per cent, of the GDP.
The MCO and its various iterations, he said, had not only flattened the Covid-19 curve but also led to the deep contraction in the GDP by 8.3 per cent in the first six months of this year.
“Nevertheless, month-on-month economic data clearly signals green shoots of recovery, with a rebound in production and trade figures, a decline in unemployment and a recovery in private consumption compared to the monthly data of the second quarter of the year.”
He reminded everyone that it was important to not only adapt to a “new normal” but also find growth opportunities.
Covid-19, he said, had accelerated the adoption of digitalisation by businesses, education sector and society.
“Studies have estimated that the economic value of digital trade-enabled benefits to the Malaysian economy, if fully leveraged, could grow to RM222 billion by 2030 from RM31 billion last year.”
Tengku Zafrul said the government’s fiscal deficit was expected to reach six per cent of GDP this year, the highest since the 2009 global financial crisis.
The government’s statutory debt should rise to 57 per cent of GDP by year end due to the four stimulus packages.
“Nonetheless, the government is committed to its fiscal responsibility agenda, in line with the goal of reducing the fiscal deficit to under four per cent of GDP over the next three to four years,” he added.
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