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2020 GDP forecast can be negative, can also be positive.

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What are your thoughts for the GDP growth for 2020? After such a miserable Q1 plus the seemingly never ending Movement Control Order (MCO), I think everyone already expecting the worst numbers for Malaysia. The worst I heard from some of my friends? One said negative 5 percent. Let’s just say I fully disagree yeah.

Malaysia has already announced a stimulus of RM260 billion and a lot of it goes to the ones most likely to spend the money. These would already provide the multiplier effects and if we are able to slowly restart the economy by June, I do think the growth can still eke out something closer to zero… Yes, just a hunch. Earlier forecast here.

Article in nst.com.my The Malaysian Institute of Economic Research (Mier) said that Malaysia’s GDP for 2020 could post up to 3.8 percent growth under the best scenario but could also be as low as a negative 1.02 percent under a worst case scenario. Mier deputy director Professor Dr Jamal Othman said this was based on the world oil price of around US$35 per barrel in the second half of 2020 and throughout 2021 as well as the government’s RM260 billion Prihatin stimulus package.

Jamal said, “Had there been no Covid-19, our GDP should be higher by RM72 billion this year after taking into account the Prihatin stimulus package. Without the stimulus, our GDP loss will be a lot larger by RM123 billion.” He added that under the worst case scenario, up to 2.4 million jobs could be lost. The Prihatin stimulus has been able to protect 955,000 jobs. Please do read the full article here: Article in nst.com.my

When it comes to forecast, let’s just read every forecast and the reasons stated for them. Then, we could make our own assessment as to which is more likely to happen. By the way, it does not mean these experts are going to be right with their assessments yeah. Most of the time, it could be inaccurate but what we learn is how they come to their conclusion. This will already be a good learning. For example, now we know the MCO will affect the growth tremendously.

We also know the potential worst case scenario for job losses and this will also help us to understand why property market may be subdued for the rest of the year. My wish is simple. Let’s keep MCO if it is still needed but continue the reopening steps based on best practices learnt from other countries which has started this reopening. Every mistake is also a learning so that we could manage the reopening of businesses better. In the mean time, stay home.

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Next suggested article: The US is restarting its economy

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