by NUR HANANI AZMAN/ pic by TMR FILE

MALAYSIA’S economy is expected to grow by 6.7% in 2021 following a projected contraction of 5.8% in 2020 caused by the Covid-19 pandemic, according to the latest edition of the World Bank Malaysia Economic Monitor: Sowing the Seeds launched today.

The  containment of the third wave of Covid-19 infections and effective roll out and distribution of vaccine could lead to a faster-than-expected recovery in consumer demand, greater investor confidence.

This is expected to push for a more robust recovery in domestic economic activity in 2021.

“Signs of recovery are showing with Malaysia posting a smaller contraction of 2.7% in third quarter of 2020 (Q320) compared to a 17.1% in Q220.

“Fiscal measures like cash transfers and wage subsidies have boosted household spending with private consumption contracting 2.1% in Q320 compared to 18.5% in Q220. However, the recent surge in Covid-19 cases and renewed movement controls could slow recovery down,” the report stated.

The report expects Malaysia to return to its pre-pandemic trend at a modest pace over the medium term.

As health risks diminish and the economy continues to recover, efforts will need to gradually shift from focusing on near-term policies to facilitating economic adjustments to enable new growth in the post-pandemic environment.