Countries around the globe are trying to minimize the damage caused by the coronavirus pandemic and Malaysia is not an exception. The local economy is expected to shrink by 6% in 2020 due to the coronavirus pandemic based on the information taken from the Global Economic Outlook. Interestingly, Oxford Analytics published this report on Monday.
According to the report, the nationwide movement control order in the country exacerbated the economic damage in the second quarter. Nevertheless, the situation is under control thanks to measures taken by the government. The economy is recovering and this fact shows that the government was able to contain the spread of the virus.
Interestingly, Malaysia’s exports would benefit from improving Chinese import demand as well as the electronics cycle. People should take into account that, there are several problems. For example, sluggish global demand, high unemployment, and weak investment. Oxford Analytics expects the local economy to shrink by 6% in 2020. According to the report, the local economy will grow by 6.6% in 2021.
As a reminder, the Recovery Movement Control Tower will remain in place until the end of the year. However, almost all sectors operate in the country except for a small number of sectors such as night clubs and entertainment centers.
The coronavirus pandemic created a lot of problems for the tourism industry. It is worth mentioning that, tourism contributes to 15.2% of Malaysia’s national economy. 194 industries involved in the sector’s chain, including service exports.
Malaysia’s economy and neighboring countries
It is worth noting that, the coronavirus pandemic is responsible for the largest growth shock to Southeast Asia since the Asian financial crisis in 1997. Based on the information taken from the report, Oxford Analytics expects the region to suffer serious losses in 2020.
Interestingly, growth is expected to eventually rebound to 6.4% in 2021. Also, the pace of recovery over the second half of 2020 will vary across the region.
Notably, the coronavirus pandemic reduced global gross domestic product (GDP) by around 9% in the first half of 2020, at least three times the size of the 2007-2009 global financial crisis. This is not the end of the story as despite a very strong rebound in the third quarter of 6.4%. Importantly, the report suggests that world GDP will contract overall by 4.4% in 2020.
Hopefully, there is momentum building in the second half of 2020, which will drive growth to 5.8% in 2021. Moreover, Oxford Analytics expects the global economy to recover to its pre-crisis peak by the midpoint of 2021.
Malaysia’s economy is struggling to cope with problems. Thailand and Vietnam will see a stronger recovery than Indonesia and the Philipines. Unfortunately, both Indonesia and the Philippines are battling new waves of coronavirus after the countries prematurely decided to ease restrictions.
Also, Oxford Analytics expects the economy of Singapore to contract by 5.7% in 2020, because of a severe decline in global trade. However, the economy will grow by 6.1% in 2021 according to the report.
Last but not least, Oxford Analytics expects Vietnam to be the only country in Southeast Asia to record positive growth in 2020.
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