Malaysia is in a strong position to ride a vaccine-led global economic recovery once the domestic COVID-19 situation is under control. GDP growth is expected to bounce back in 2021 and 2022, underpinned by supportive economic policies, ample domestic savings, a diversified economy, and a resilient banking system.

However, the outlook remains subject to the uncertain developments of the pandemic. The recovery can was also be uneven, with the construction and services sectors remaining depressed while manufacturing has recorded an export led expansion. Against this backdrop, supportive economic policies remain critical to protect people’s welfare and strengthen the recovery. At the same time, preserving monetary policy space and advancing a medium term plan to rebuild fiscal buffers would contribute toward economic stability and resilience post-pandemic.

The report features AMRO’s assessment of the Malaysian economy as well as policy considerations. In addition, it takes a deep-dive into key issues confronting the economy with the following: (i) Medium-term Debt Sustainability and Fiscal Reform Considerations; (ii) Assessing Demand and Supply for Malaysian Government Bonds in 2021; and (iii) Loan Repayment Reliefs and the Credit Fallout from the COVID-19 Crisis.