FDI, tourism among 4 areas to bear brunt of Covid-19, says World Bank

The World Bank’s country manager for Malaysia, Firas Raad, says it is ‘natural’ to assume a revision in GDP growth targets will happen.

KUALA LUMPUR: The World Bank is still studying the impact of Covid-19 on the Malaysian economy but says it is “natural” to think that a revision in gross domestic product (GDP) growth targets will happen.

Speaking to reporters on the sidelines of an event at Bank Negara Malaysia, World Bank country manager for Malaysia Firas Raad said the Covid-19 situation was evolving and that they have not yet decided on new GDP numbers.

Putrajaya had previously said it would maintain its 4.8% GDP growth target for 2020 although the World Bank had revised its forecast to 4.5%.

This, however, was before the Covid-19 outbreak in China which has seen hundreds of tourists scrapping plans to come here.

Firas said the World Bank expected four main sectors to be impacted by Covid-19 – tourism, foreign direct investment (FDI), supply chains which Malaysia was a part of, and prices of commodities including palm oil, oil and gas.

“Malaysia is a trading country and China is one of its biggest partners, so there will be an effect but to what extent we are still examining,” he said.

On the government’s stimulus package to counter the impact of Covid-19, Firas said Putrajaya must be careful not to be too comprehensive.

He said the government needed to be “selective and strategic” in how it would support industries affected by the crisis.

“But it is in a difficult situation because we don’t know where we are in this crisis, whether it has peaked or hasn’t.”

The government, he said, needed to calibrate how much support it was providing, “whether it does one round of stimulus now or come back and do other rounds”.

He said small and medium enterprises (SMEs), which made up 98% of all firms in Malaysia and contributed 37% to the GDP, would need support.

Earlier, Firas attended the launch of the World Bank’s “A Practitioner’s Guide to Innovation Policy”, which gives lessons on what is needed to create an ecosystem for innovation.