by NUR HANANI AZMAN/ pic by BLOOMBERG

Malaysia’s economy is projected to grow by 4.5% in 2021 amid a dramatic resurgence of the Covid-19 virus beginning in mid-April 2021, according to the World Bank Malaysia Economic Monitor: Weathering the Surge.

World Bank Group senior economist Shakira Teh Sharifuddin said this latest projection is lower than earlier forecasts of 6.0% growth, reflecting a slower pathway toward suppressing the pandemic and a slower-than-expected vaccine rollout.

“This recent spike in infections is raising concerns about the overall capacity of Malaysia’s health system and the effects of the ongoing cycle of opening and closing the economy on households and firms.

“Malaysia’s immediate priority must focus on the efficient and sustained management of the ongoing pandemic and its effects on individuals, households, and firms,” she said during the report’s virtual launch on Facebook today.

The report stressed the importance of protecting the lives and health of citizens – and thereby preventing further strains on the country’s health system – is vital to ensure a safe resumption of economic activities and a prevention of a more protracted economic downturn.

“Malaysia’s economic recovery hinges on policies to promote immediate relief and on clear, accessible and targeted support programs to enable firms to preserve liquidity.

“Recovery efforts should include the extension of conditional wage subsidies, improving the predictability of Standard Operating Procedure regulations, and expediting approvals and disbursements for existing loans,” she added.

In the medium and long term, however, deep and structural reforms will be required for a private-led post-pandemic economic recovery.