Malaysia to Cut 2021 GDP Growth Outlook, Likely Close to 4%

(Bloomberg) -- Malaysia will lower its economic growth outlook for this year due to movement restrictions against Covid, the country’s finance minister said, signaling the government may forecast expansion around 4%.

While there’s optimism that the current surge in cases can be contained and lockdowns can be eased, the government still expects to lower its gross domestic product estimate for 2021, Finance Minister Tengku Zafrul Abdul Aziz said Monday in an interview with Bloomberg TV.

“We’re in the midst of revising to a lower number and will share the exact number after we get data from the ground,” Zafrul said. Asked if the forecast could be cut to around 4%, Zafrul responded that it could be “around the range you mentioned.” The government has already said it will revise the outlook, currently at 6%-7.5%, next month.

Pressure is mounting on Prime Minister Muhyiddin Yassin with lockdowns costing the economy 1 billion ringgit ($239 million) a day and only 10% of the population fully vaccinated, while the largest party in his ruling coalition just withdrew its support for the premier. New Covid cases reached a record 9,353 on Saturday, with the Klang Valley --- which includes Kuala Lumpur -- accounting for about 60% of the total.

READ: Malaysians’ Desperation Grows as Politics Cloud Virus Action (1)

Zafrul was appointed last week as coordinating minister for Malaysia’s National Recovery Plan, responsible for monitoring the implementation of strategy, including intervention measures.

Other key points from the interview:

• The debt ceiling may have to be raised to 65%, from 60% currently, as the government increases borrowing to fund its economic aid packages
• This year’s fiscal deficit will likely widen to 6.5%-7%, up from the projected 6%

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