THE national economy will bounce back next year and could grow by an estimated 6.9%, said the World Bank today in its latest Malaysia Economic Monitor report.

However, growth this year is expected to drop sharply by 3.1% due to the impact of the Covid-19 pandemic, which has hit 90% of the globe, including Malaysia’s major trading partners.

The World Bank lead economist for Malaysia, Richard Record, said the pandemic, which has infected more than 9.3 million people worldwide, has left lasting scars on the world economy and Malaysia has not been spared.

However, Malaysia should be able to bounce back next year due to its diversified economy and its sound economic policies, which included aid packages that targeted the most vulnerable households and helped small businesses stay afloat.

The report said aggregate investment contracted for the fifth consecutive quarter by 4.6% in the first quarter of 2020 (Q1 2020), as compared to a contraction of 0.7% in Q4 2019, with broad-based weaknesses in both private and public investment.

Due to weak external demand, Malaysia’s exports of goods and services declined for a third consecutive quarter by 7.1% in Q1 2020 (Q4 2019: -3.4%), the largest decline since the global financial crisis in 2009, according to the report.

Private consumption moderated to 6.7% in Q1 2020, down from 8.1% in Q4 2019, largely reflecting the substantial impact of Covid-19 and the movement control order on retail, travel, leisure, and recreational spending, and consumption of durable goods during the previous period.

World Bank Country Manager for Malaysia Firas Raad said important social protection measures were needed to help vulnerable Malaysians survive the current economic storm and thrive in a new post-pandemic reality.

“Protecting livelihoods is important so that those who have lost their jobs and businesses are able to get back on their feet and contribute to Malaysia’s economic recovery,” he said.

The report has recommended that government efforts in the near-term to focus on supporting relief and recovery efforts by deepening social assistance for lower-income households, improving the delivery of social protection programmes, and promoting job recovery. June 25, 2020.