Sabah UiTM’s Firdausi Suffian said the economy will go up when spending resumes, businesses begin to invest more, and government development projects start rolling out.
But he does not agree with BNM’s high estimation as many industries have yet to recover, including tourism, which is one of the biggest money makers for the nation.
“The estimation is quite optimistic to me. If (it were to reach) 6% to 7.5%, it usually means there are new sectors in the economy besides vast expansion in certain sectors and investments,” he told FMT.
“Many countries have also yet to open up their borders. So, for example, how can tourism contribute to our economy?” he asked, pointing out that it is one of the key revenue earners.
BNM governor Nor Shamsiah Mohd Yunus had said the economy is projected to expand between 6% and 7.5% in 2021 compared with a contraction of 5.6% in 2020.
This is supported by domestic factors such as consumption and a brighter external environment fuelled by vaccine rollout.
She said less stringent Covid-19 containment measures, gradual improvement in labour market conditions, continued policy support for households and businesses, and improving external demand amid a technology upcycle would drive economic recovery.
“The Malaysian economy is to rebound in 2021, with the gross domestic product (GDP) achieving pre-Covid-19 levels by mid-2021,” she said during a briefing for editors.
Meanwhile, Carmelo Ferlito of the Institute for Democracy and Economic Affairs (IDEAS) said there would be “some sort of rebound” if the Covid-19 situation and policies in place to contain it remain at the level they are now.
“However, we don’t know yet if there will be new lockdowns or measures. A more precise estimation could come towards the second half of the year.
“Probably, we should look at a conservative estimate of 3% but be open to an increase if the vaccination and movement restrictions improve,” he told FMT.
Ferlito said economic growth would also be affected by other factors such as inflation.
“BNM announced there might be a high level of inflation in the second quarter, so this is also an element of concern,” he said.
He believes private investments are the main determinant to move the country into a sustainable growth projection.
“That is the key element, not just looking at the aggregate level of GDP, but looking specifically at private investments.
“Let’s not forget that interstate travel is not yet allowed and that we have some problem of congestion from the supply chain, the logistics that are required in attracting foreign direct investments,” he said.