BNM’s Take on the Economy!

We reproduce below the key slides on the review of the economy in 2020 and prospects for 2021 done by BNM.

Is BNM Right on Prospects?

 

·       BNM is still upbeat about 2021 as other economies (tentatively) are on a recovery path.

·       Expectation is for GDP growth of 5.5% in 2021 – that’s lower than 6.5% -7.5% projected by MOF. Other economists view a growth of 4.0% or thereabouts because of MCO 2.0.

·       It is still better than negative 5.6% for 2020

·       The game is to remain cautious. Why? There has been numerous business closures, rise in bankruptcies and severe job losses – only matched by the AFC of 1998. Private consumption and investment will be subdued.

·       Banks may consider moratoriums for selected cases but generally this is too little, too late for many.

·       BNM and others need to focus on services and manufacturing for enabling growth. And the private sector drives growth (see Tables below). So, more conversations on cashflow, jobs, taxes, incentives and others are required.

·       Meanwhile, the authorities could survey (especially after dark) on the streets of KL, Penang and JB to understand the poverty and impact of Covid-19! Why are there whole families sleeping on the streets?

References:

1. Sidang Akhbar - Prestasi Ekonomi Suku Keempat Tahun 2020, Bank Negara Malaysia,
11 Feb 2021

2. Lending activities improving, Ganeshwaran Kana, The Star, 12 February 2021