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REFSA Notes #2/2021: 10 Questions for Bank Negara on the 2021 GDP Growth Forecast


Are we on our way to achieving a GDP growth rate of 6.0% – 7.5% for 2021?

Recently, Bank Negara in its Economic and Monetary review forecasts the nation’s GDP growth to range from 6% to 7.5% for 2021. Interestingly, the review often highlights the many possible downside risks.

Here, we examine the assumptions and forecasts underlying the growth estimate, and propose 10 questions meant to probe the validity of the forecast.

Overall, our concern is that there is significantly more downside risk than even acknowledged, and that GDP growth in 2021 may therefore turn out to be significantly lower than forecast. If this is indeed the case, then government policy should be significantly adjusted in order to firstly, limit the possible downsides, and secondly, to lessen the impact of any possible downside risks.

At this juncture, we cannot afford to fail given that the economic consequences of the possible downside risks will be severe especially to the B40 community and small and medium enterprises (SMEs)


 Here are the 10 questions:

1. Is the pandemic evolving in a favourable direction?

2. Is it possible for the economy to recover while the pandemic is not under control?

3. Is there any progress on putting in place a comprehensive “Find, Test, Trace, Isolate & Support (FTTIS)” system, and avoid the blunt instrument of lockdown?

4. How much positive spillover effects can Malaysia expect from improving global conditions?

5. Where will export growth come from?

6. Where are the signs that labour conditions are improving?

7. Where are the green shoots of the recovery?

8. Will the government be able to increase public investment?

9. Are the conditions right for private investment to flourish?

10. What policies are in place to manage the end of the pandemic and start to build back better?







About REFSA Notes

REFSA Notes is a collection of thoughts, reflections, and ideas from our research team. They aim to provide the groundwork for further discussions, commentary, research agendas, and policy recommendations.