In a statement, Malaysian Rating Corporation Bhd (MARC) said it estimated that gross domestic product (GDP) growth and public investments for 2020 to contract by 5.7% and 19.8% respectively. The year-end results are expected to be released soon.

“All GDP expenditures are expected to decline in varying degrees, but we project public expenditure to expand by 4.6% year-on-year due to fiscal injections in 2020.”

MARC said that while various measures have been introduced to support aggregate demand throughout the pandemic, it sees private consumption falling by 4.2% for 2020.

It said, however, that private consumption will continue to be the “mainstay” for Malaysia’s economy, supported by stimulus measures including the cumulative overnight policy rate cut and financial support for vulnerable groups.

“We expect growth in private consumption in 2021 to be sluggish following the trend of previous recessions.”

MARC said real GDP growth will likely rebound in 2021 at 5.6% because of the low-base in 2020 and because the second movement control order is less stringent than the one last year.

On unemployment rate, MARC said it would end at 4.5% in 2020 and likely decline to 4% in 2021.

“The present crisis will influence Malaysia’s appetite for reforms. Judging from the impact of the AFC on the Malaysian economy, we expect reverberations from the present crisis to linger for some time and accentuate the economy’s weak points.”