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GDP forecast stays despite coronavirus. Stimulus can be later if needed.

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Malaysia’s GDP growth for 2019 is expected to be 4.7%. This is a good number yeah. For 2020, our Finance Minister Lim Guan Eng had earlier announced that the projection is for 4.8%. This is also considered a very good number but there has been many other predictions by others and the number of 4.8% is still the highest currently. In a talk in early January 2020, I shared the below slide for all the GDP growth predictions.

Predictions as at Jan 2020.

Of course the conclusion for this slide is simple; Malaysia is NOT expected to go into a recession in 2020, not even a technical one. (Technical recession means two consecutive quarters of negative growth). It’s also clear that these predictions were all before the current coronavirus issue which has now affected 20 countries throughout the world. So, will coronavirus be impacting the economic growth of countries and specifically, Malaysia? Finance Minister Lim Guan Eng replied to this question.

Article in edgeprop.my here. Finance Minister Lim Guan Eng said that it is too early for the government to revise Malaysia’s GDP growth forecast of 4.8% for 2020. He said, “We need to wait and see. We need to be aware that Thailand welcomes some 11 million tourists from China annually, compared with 2 to 3 million in Malaysia. There is a big difference. So there will be impact [from lower tourist arrivals], but unlike what is faced by Thailand.”

He added, “But if there is an impact, the Cabinet acknowledged that the Ministry of Finance is evaluating and planning to launch economic stimulus package, if needed. But this is still in its early stages.” As of now, the only sector needing assistance will be the tourism industry which will be severely affected by this current Coronavirus episode. Please do refer to the full Article in edgeprop.my here.

I think I have to agree with him. Thailand really do have by far more tourists than Malaysia. In fact, Bangkok is the most visited city in the world, surpassing even London. Bangkok has more international visitors than London! Thus, it’s good for Thailand to immediately revise its GDP forecast. This will help to lessen the impact to their stock market for example if they suddenly have to revise those numbers very much later when they know they are already affected today.

As for coronavirus, I do wish that it should reach its peak soon and then starts to become less serious. There are some experts who said that it should reach its peak by February 2020 and some who said that it may be many more weeks. Either way, predictions seem to point to recovery, only difference would be the duration. I consider this as encouraging too. As for a matter of perspective, please note the Influenza has killed no less than 6,000 people every year in the United States. That’s why an influenza jab is very important. Take care everyone.

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Next suggested article: If the economy slows, the government has a solution says FM

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