Malaysia lowers growth forecast on worsening virus outbreak

Bloomberg

Malaysia lowered its 2021 economic growth forecast for a
second time, as renewed movement restrictions and rising infections hamper the recovery. Gross domestic product is expected to expand 3%-4% this year, Bank Negara Malaysia said, down from an earlier estimate of 6%-7.5% growth.
Malaysia’s economy shrank 2% in the second quarter on a seasonally adjusted basis compared to the previous three months, according to data from the central bank. That cut
short a brief uptick, and compared with the median estimate of a 1.9% contraction in a Bloomberg survey of seven economists.
Malaysia has eased virus restrictions for those who have completed the full vaccination regime, allowing them to cross state borders and dine at restaurants as authorities seek to re-open the economy.
The government placed the entire country under lockdown in June, a move that cost 40,000 people their jobs and sent industrial growth to a five-month low. The restrictions cost the economy an estimated 1.1 billion ringgit ($260 million) a day.
“Malaysia’s growth recovery is expected to broadly resume in the later part of the second half of 2021 and improve going into 2022,” central bank Governor Nor Shamsiah Yunus said.
“A key catalyst for economic reopening and a driver of positive sentiment will be the
continued progress and effectiveness of the national vaccination program,” she said, adding that growth will also be supported by higher commodity output, pent-up demand and large-scale infrastructure projects. Compared to a year earlier, when the country imposed its strictest containment measures against the pandemic, the economy grew 16.1%.
The median estimate in a Bloomberg survey of 19 economists was for 14.1% growth.
The ringgit was little changed after the data, at 4.2347 to the dollar.