KUALA LUMPUR – Malaysia’s massive Budget 2021 will cushion the economic downturn, but the country’s economic rebound will depend on the return of global trade, says Moody’s Analytics, as reported on Bernama.
Its economist Denise Cheok said lockdowns across Europe and the United States pose significant downside risks, even with vaccine rollouts.
“Vaccine distribution will take time, and consumer spending will likely only revive gradually,” she said in a note yesterday.
Malaysia’s Budget 2021 is the largest in the country’s history, with its allocation of RM322.5 billion.
On exports, she said Malaysia is set to raise its export tax on palm oil from January 2021.
“This will likely boost exports in December as buyers from India and China front load demand,” Cheok said.
She pointed out that Malaysia’s agriculture export in November was boosted by high demand for palm oil and related products.
Meanwhile, she said retail sales — which have been weak since the second quarter last year — will likely remain below pre-COVID-19 pandemic levels until the middle of this year.
Cheok said consumer and investor’s sentiment took a hit in November after the surge in COVID-19 cases triggered partial movement control orders in most states.