Malaysia to Cut 2021 GDP Growth Outlook, Likely Close to 4%

  • Malaysia will lower its economic growth outlook for 2021 due to movement restrictions against Covid, the country’s finance minister said, signaling the government may forecast expansion around 4%.
  • While there’s optimism that the current surge in cases can be contained and lockdowns can be eased, the government still expects to lower its gross domestic product estimate for 2021, Finance Minister Tengku Zafrul Abdul Aziz said in an interview with Bloomberg TV.
  • Asked if the forecast could be cut to around 4%, Zafrul responded that it could be “around the range you mentioned.” The government has already said it will revise the outlook, currently at 6%-7.5%.
  • Pressure is mounting on Prime Minister Muhyiddin Yassin with lockdowns costing the economy MYR1bn (USD239mn) a day and only 10% of the population fully vaccinated, while the largest party in his ruling coalition just withdrew its support for the premier.
  • New Covid cases reached a record 9,353 on 10 Jul 21, with the Klang Valley — which includes Kuala Lumpur — accounting for about 60% of the total.
  • Zafrul was appointed last week as coordinating minister for the nation’s National Recovery Plan, responsible for monitoring the implementation of strategy. While an accelerated vaccine roll-out has allowed the government to ease virus curbs in seven states, much of the country remains under a lockdown since 1 Jun 21.
  • Zafrul said he would propose raising the debt ceiling to 65%, from 60% currently, in parliament; there’s “enough liquidity in the market” for the government to borrow to fund stimulus packages
  • 2021’s fiscal deficit will likely widen to 6.5%-7%, up from the projected 6%.
  • About 23% of the population have received at least one dose of the Covid vaccine, while 10% have been fully inoculated.

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