With the strict curbs enforced under Phase One of the National Recovery Plan expected to dent Malaysia’s economic recovery, the government will revise its gross domestic product (GDP) growth forecast for 2021 downwards, said Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz.
Previously, the government had projected the 2021 GDP growth to be between 6% and 7.5%.
He shared that Putrajaya is set to unveil its new forecast in August along with a widened deficit figure, reported Malay Mail.
“For us in MoF (Ministry of Finance) and Bank Negara we are studying the cost of the current phase one … and also the mitigating impact with the introduction of PEMULIH,” he said as quoted by Malay Mail.
Totalling RM150 billion, PEMULIH – which is the latest COVID-19 relief package announced by the government – is expected to add 2% to the economy’s overall growth, said Tengku Zafrul.
Of the total amount, RM10 billion will be directly channelled to the pockets of the middle- and lower-income households.
According to the Malay Mail report, the Perikatan Nasional government has already rolled out seven relief packages, with a total value of RM380 billion, in response to the public health crisis facing the country. The move has forced it to defer any plans to reduce its debt load.
Tengku Zafrul revealed that the government will increase investment yields, recalibrate government expenditure and borrow more to finance PEMULIH, which is anticipated to bring the government’s deficit beyond its initial target of 6%.
The government has repeatedly affirmed its commitment to reduce its deficit even as it tabled a record federal budget of RM330 billion for this year in a bid to revive the economy.
Based on official estimates, the losses incurred by Malaysia from the various movement control orders hover between RM1 billion and RM2.5 billion per day.