KUALA LUMPUR (March 1): The government expects the Malaysian economic position to improve this year, in line with the global recovery, said Prime Minister Tan Sri Muhyiddin Yassin.

The country’s economic recovery will be led by the services and manufacturing sectors, which account for more than 80% of gross domestic product (GDP), he said.

At the same time, domestic demand is projected to record steady growth, supported by improvements in the labour market, low inflation and favourable financing conditions as well as the resumption of major infrastructure projects.

Citing forecasts by the International Monetary Fund (IMF) and the World Bank, Muhyiddin said Malaysia’s economy will grow at a rate of 7% and 6.7% this year. Meanwhile, global GDP in 2021 is projected to recover at 5.5%, whereas world trade is also projected to grow at 8.1%.

“In line with the recovery of world economic and trade activities, the country’s economy is also expected to recover in 2021,” he said at an event this morning to commemorate the first year anniversary of the current Malaysian government.

On Malaysia’s economic recovery thus far, Muhyiddin said the impact of the implementation of the second movement control order (MCO), which commenced on Jan 13, with only manufacturing and part of retail and construction allowed to operate with 100% production capacity, is three times lower than the first MCO, which commenced on March 18, 2020. The second MCO, currently implemented in Kuala Lumpur, Selangor, Penang and Johor, is scheduled to end this Thursday (March 4).

“However, the loss of revenue is still huge at around RM633 million a day. Accordingly, the government has directed that all economic activities in the services, retail and construction sectors be allowed to operate at 100% capacity with strict standard operating procedures (SOPs) to be complied with. Allowing these economic activities to operate provides an opportunity for companies to continue generating income,” he said.

Muhyiddin added that the ringgit had also emerged as one of the strongest currencies in Southeast Asia, driven by ongoing government and private initiatives in facilitating the economic recovery and tackling the Covid-19 pandemic.

He said this is an important indicator to assess the economic sustainability of the country in the long run.