According to the WB’s October 2020 Economic Update for East Asia and the Pacific published on September 29, the change in its GDP forecast for Malaysia reflects the heightened uncertainty surrounding the start and speed of the global recovery, which would weigh on investment decisions and external demand.
The WB said the Malaysian economy had been severely affected by the pandemic, leading to a double-digit GDP contraction of 17.1 percent in the second quarter of 2020.
The contraction was driven primarily by a decline in domestic demand due to the imposition of the movement control order (MCO) to stem the spread of COVID-19, as well as weak external conditions.
The WB’s revised 2020 GDP forecast for Malaysia is within Bank Negara Malaysia's (BNM) contraction forecast of between 3.5 percent and 5.5 percent for the year.
According to BNM's statement on August 14 on the economic and financial developments in Malaysia in the second quarter of 2020, the country's GDP is, however, expected to grow between 5.5 percent and 8 percent in 2021./