BNM: 2021 GDP Growth Maintains At 6% To 7.5%

Bank Negara Malaysia has maintained the 2021 GDP growth projection at 6 percent to 7.5 percent.

According to the central bank, the Malaysian economy registered a smaller decline of 0.5 percent in the first quarter with growth performance supported mainly by the improvement in domestic demand and robust exports performance, particularly for E&E products.

However, the imposition of the second MCO and continued closure of international borders impacted economic activities.

“The better overall performance reflects the improvement in domestic demand and the strength in our exports,” said BNM Governor, Datuk Nor Shamsiah.

The central bank also reported that headline inflation turned positive to 0.5 percent during the quarter, attributable to the low fuel inflation following the base effect as well as lapse in the effect from the tiered electricity tariff rebate, implemented between April to Dec 2020.

“Core inflation moderated to 0.7%, mainly reflecting the lower inflation for rental and jewelleries,” the bank said.

Additionally, the net financing to the private sector recorded an annual growth of 4.7 percent during the quarter, supported by higher total outstanding loan growth of 4.3 percent.

Business loan disbursements and repayments remain above the 2017-2019 quarterly average levels.

“Despite the recent re-imposition of containment measures, the impact on growth is expected to be less severe than that experienced in 2020, as almost all economic sectors are allowed to operate,” Nor Shamsiah said.

“Overall, the growth recovery will benefit from better global demand, increased public and private sector expenditure as well as continued policy support. Higher production from existing and new manufacturing facilities, particularly in the E&E and primary-related sub-sectors, as well as oil and gas facilities will provide a further impetus to growth,” she added.

The bank is also optimistic that the roll-out of the domestic Covid-19 vaccine programme will also lift sentiments and contribute towards recovery in economic activity.

This year, headline inflation is expected to average higher between 2.5 percent and 4 percent, primarily due to the cost-push factor of the higher global oil prices.

Headline inflation in April and May may rise to approximately between 6.5 percent and 7 percent. However, this will be transitory as headline inflation is expected to return to below 5 percent in June, and continue to moderate thereafter as the base effect dissipates.

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