## Malaysia – Current Economic Developments

## Source details

**Canonical URL:** [Malaysia – Current Economic Developments](https://www.imf.org/-/media/files/oap/oap-home/2020/mys-jschmittmann-07302020.pdf)

## Other formats

- [Markdown version](/-/media/files/oap/oap-home/2020/mys-jschmittmann-07302020.pdf.md)
- [Structured JSON version](/-/media/files/oap/oap-home/2020/mys-jschmittmann-07302020.pdf.json)

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### COVID-19 containment and mobility
- Malaysia "successfully contained the spread of COVID-19", keeping overall cases and fatalities relatively low.
- Mobility has improved as restrictions are eased.

### Economic shock and growth projection
- "The COVID-19 shock has hit Malaysia’s economy hard."
- Malaysia: 2020 Growth Projection (in percent, ppt) shows a sharp downward revision from 2020 (Jan WEO) to 2020 (June WEO) relative to 2019 (Actual). (Chart referenced in source.)

### Fiscal response: economic stimulus package
- The authorities announced economic stimulus measures amounting to "20.4 percent of GDP".
- Composition of the 20.4 percent of GDP package (In Percent of GDP):
  - Direct Fiscal Stimulus: "4.3%"
  - BNM Credit Relief Program: "6.9%"
  - New Public Guarantee Scheme: "3.5%"
  - Employment Provident Fund Measures: "3.5%"
  - New BNM Facilities: "0.3%"
  - Bringing Forward GLC Investment: "1%"
  - Business Financing by Private Sector and Public Banks: "0.4%"
  - Other: "0.6%"

### Fiscal balance and government debt
- Time-series charts highlight:
  - General government gross debt, percent of Fiscal year GDP (RHS)
  - Net lending/borrowing, central government, percent of fiscal year GDP (LHS)
  - (Specific historic values shown in chart in source.)

### Monetary and financial policy settings
- "Monetary and financial policy settings are supportive."
- Financial conditions improved after a sharp deterioration in March/April 2020.
- Malaysia Portfolio Flows and Ringgit (LHS: Millions of US Dollars; RHS: Exchange Rate) charts show:
  - Equity Flows (LHS)
  - Debt Flows (LHS)
  - Total Portfolio Flows (LHS)
  - MYR/USD (RHS) (Inverted)
  - (Time-series values illustrated in source.)

### Production, consumption, services, labor, and inflation
- "The production side is recovering faster than consumption and services related activities."
- "Unemployment has risen sharply and inflation remains low."
- Malaysia Unemployment chart provides:
  - Unemployed ('000) (RHS)
  - Unemployment Rate (LHS)
  - (Historic monthly data from Jan-10 through Jan-20 and Jul-20 shown in source.)

### Medium-term challenges and productivity
- "COVID-19 amplifies existing medium-term challenges..."
- Relative Income Per Capita of Malaysia (In current US$; ratio) charts compare Malaysia to High income threshold, relative to US (rhs), and relative to the OECD average (rhs) over 1970–2018.
- TFP Growth at Constant National Prices (Index, 1970=100) plotted for Malaysia, Korea, Taiwan Province of China over 1970–2015 indicates slower TFP growth dynamics.

### Outlook, risks, and opportunities
- "A protracted and uneven recovery is likely."
- Large uncertainty and important risks listed:
  - "Uncertainty around pandemic evolution"
  - "Weaker external demand; GVC reconfiguration"
  - "Rising inequality and informality"
  - "High leverage among some firms and households could weigh on recovery"
  - "Global financial conditions could abruptly tighten again"
  - "Prolonged sectoral issues and scarring (tourism, retail)"
- Opportunities identified:
  - "COVID-19 could accelerate digitalization and productivity gains"
  - "Position for a green recovery"
  - "Malaysia is well placed to benefit from growth in the E&E and medical supply sectors"

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_Source: https://www.imf.org/-/media/files/oap/oap-home/2020/mys-jschmittmann-07302020.pdf_