( Kuala Lumpur, 19th July 2020 ) The World Bank said that compared with many other economies, Malaysia is coming out of a severe recession crisis.
World Bank Brunei, Malaysia, the Philippines, Thailand, East Asia and Asia-Pacific region director Ndiame Diop (Ndiame Diop) issued a statement that although Malaysia faces many challenges brought about by the new crown pneumonia, China's performance is better than many economies .
He said that Malaysia's diversified economic structure, sound financial system, effective public health response measures and active macroeconomic policy support all help to alleviate the impact of the epidemic.
"Although we expect that the economy will shrink sharply this year, and GDP will shrink by 3.1%; there will be a particularly noticeable contraction in the second quarter, but the situation will get better."
The World Bank estimates that 90% of the world economy will shrink this year.
Diop mentioned that the impact of the new crown pneumonia is expected to cause the global extreme poverty rate to increase for the first time since 1998, effectively swallowing up the progress made since 2017.
He pointed out that the Malaysian government has adopted a six-stage strategy to solve, restore and restart the economy, and Malaysia is currently in the recovery stage, laying the foundation for the subsequent stages, namely economic revitalization and reform.
"This means that the government's goal is not only to get rid of this crisis, but also to strive to become better than before, so that the international economy is more able to withstand the next crisis."
He said that although important policy support has been provided, the government may need to do more to protect disadvantaged families and businesses.
Employment opportunities will recover in time
Although certain economic activities will rebound after the regulatory order, income and employment opportunities will still take some time to recover, because certain economic sectors (such as manufacturing) will resume growth faster than others (such as tourism).
"This may mean providing further financial assistance to disadvantaged groups, especially those low-income groups that lack savings and support networks to withstand the long-term impact on their income."
He added that this crisis highlights the need for Malaysia to build a stronger social protection system; a more cost-effective and less decentralized system that can improve the welfare of individuals and families during the recovery period and in the future.
He pointed out that in the case of limited budget space, the new crown pneumonia has caught Malaysia somewhat by surprise and responded by direct injection of capital.
He also said that as the economy recovers, Malaysia will need to carry out reforms to increase taxation, including finding new and progressive sources of income.
He mentioned that the focus is on improving the skills and retraining of the workforce in the new economy, as well as accelerating the digital agenda and bridging the digital divide.
"Even before the crisis, people are increasingly aware that Malaysia needs to shift its competitive approach to attracting higher quality investment, which is especially important now."
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