Economy to shrink 3.5% to 5.5% this year

Bank Negara Malaysia (BNM) has revised downwards the country’s gross domestic product (GDP) growth to between -3.5% and –5.5% this year mainly due to the impact of Covid-19 pandemic.

The central bank expected the economy to gradually pick up in the second half of the year with government’s initiatives; Prihatin and Penjana are expected to contribute over 3% to this GDP growth this year.

However, BNM anticipated the economy to pick up in 2021, with growth projected to be at 5.5% to 8%. 

The International Monetary Fund (IMF) has projected the Malaysian economy to grow at an average of 6.3%, and the World Bank, 6.9% for next year. 

“Our financial system fundamentals are still strong. Unlike during the Global Financial Crisis in 2008 – 2009, the Malaysian banking system entered this challenging episode from a position of strength,” said Minister of Finance Tengku Zafrul Tengku Abdul Aziz in a statement.

“The banking system’s capital buffer, at RM121 bil, is more than three times the level during the Global Financial Crisis. Ample liquidity, coupled with sound asset quality and a robust risk management framework, have continued to support lending activities and the overall economy,” he added.

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