(Updated)

Private consumption stays as main driver of Malaysia economic growth — BNM

Datuk Nor Shamsiah Mohd Yunus (Photo by Bloomberg)

Datuk Nor Shamsiah Mohd Yunus (Photo by Bloomberg)

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KUALA LUMPUR (Aug 13): Bank Negara Malaysia (BNM) Governor Datuk Nor Shamsiah Mohd Yunus said today private sector consumption will remain as the main driver of the country’s economic growth as the government’s effort to mitigate the Covid-19 pandemic’s impact on people's livelihoods and measures to expedite vaccination pave the way for higher consumption activities to rejuvenate the economy. 

Recovery in the country’s exports will also lend support to local employment and consumption activities, according to Nor Shamsiah, who was speaking at a virtual press conference today in conjunction with the announcement of Malaysia’s economic data for the second quarter of 2021 (2Q21).

The cash-flow relief measures and other stimulus packages offered by the government to vulnerable households "will be the driver" of economic growth, she said.

According to BNM’s statement today, Malaysia’s economy, as measured by gross domestic product (GDP), grew 16.1% in 2Q21 from a year earlier.

In quarterly terms, the country’s 2Q21 GDP however contracted 2% from the preceding 1Q21, BNM said.

BNM said the country’s 2Q21 private sector consumption expanded 11.6% from a year earlier while net exports grew 34.3%.

At the press conference today, Nor Shamsiah said BNM expects Malaysia’s labour market recovery to resume once the benefits from the Covid-19 vaccination programme begin to materialise as movement restrictions will be lifted while economic activities gradually normalise.

According to her, the country's labour market was already on a recovery trajectory in 1Q21 and early 2Q21 as pandemic-led movement restrictions eased nationwide.

The reenforcement of Phase One of the total lockdown across the country since June 1, 2021 had however affected the recovery momentum of the labour market, which led to the increase in the country's unemployment rate to 4.8% in June 2021 from 4.5% in May 2021.

According to news reports, Malaysia's total lockdown is now known as Phase One of the National Recovery Plan or Pelan Pemulihan Negara (PPN) following the announcement of PPN on June 15 by Prime Minister Tan Sri Muhyiddin Yassin.

Quoting Muhyiddin, news reports indicated that Phase One of PPN, was scheduled to end on June 28 but has been extended.

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Chong Jin Hun