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Alarming? Recession first in 2020, then only recovering in 2021.

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Remember the recent assessment on the Malaysian economy just a while ago? Q1 GDP may be negative yeah Expectations from two local bank analysts are that it’s a negative Q1 for 2020. One says it’s as bad as 1.1% while another says it’s a negative 2.8%! As for the whole of 2020, this was one latest prediction. Still positive and it’s by Moody’s. It says GDP for Malaysia for whole of 2020 will come in at around 3%.Moody’s GDP Malaysia at 3%

If you think that was still very optimistic, here’s a latest one which says Malaysia’s 2020 GDP is likely to be falling into a recession in 2020. Briefly, recession means total GDP for the full year is negative. Technical recession means two consecutive quarters of negative growth. FYI also, it seems that the panic buying where so many people rushed to buy so many weeks of supply has not helped the GDP much.

Article in themalaysianreserve.com . The World Bank Group in one latest assessment says that the Malaysian economy will contract by -0.1% for the whole of 2020 and this is a huge decrease from its earlier projection of 4.5% growth. Total recovery is expected only in 2022. Its lead economist Dr Richard Record said, “It really depends on whether the pandemic will get worse or see gradual recovery. Our baseline scenario is an anticipated recovery in the fourth quarter this year (4Q20), whereby the economy will then bounce back in 2021 with a 6.4% growth forecast.” Record said that the RM250 billion stimulus package is the right medicine to preserve the structure of the economy.

Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said, “Malaysia is a net exporter country and thus heavily dependent upon external demand for its products and services. When the whole global economy is experiencing lower business activities, it will definitely affect Malaysia’s exports.” He added, “Most important is to revive the economy during 2H20 through targeted fiscal stimulus packages and aggressive efforts in identifying potential new revenues and reducing unnecessary expenditures.” For the full and comprehensive article, please refer to Article in themalaysianreserve.com

By the way, all projections are based on the fact that COVID-19 pandemic remains out of control and most countries to continue to struggle with the lockdowns, partial lockdowns and even just the usual close this shop and close that shop and social distancing. Truth is, it still affects consumption and thus the economy as a whole. Imagine everyone working from home for example, of course the shops whether they open or not will still not have any customers.

For now, what we could do is to stay at home, hopefully the COVID-19 will soon stabilise and the recovery of affected patients start to overwhelm the number of newly infected patients. Now, that would give all analysts something new to think about. When will this start to emerge, well at the very least, a clearer sign will only be seen by end of April 2020 yeah. Happy following and please take care.

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Next suggested article:  A RM250 billion stimulus to combat the COVID-19

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