KUALA LUMPUR (Nov 6): All supply-side sectors of the Malaysian economy are expected to contract in 2020 due to the unprecendented Covid-19 pandemic crisis before rebounding in 2021, the Ministry of Finance (MoF) said in its Economic Outlook 2021 report. 

For 2020, the MoF said the construction sector is expected to contract the most at 18.7%, followed by the mining industry at 7.8%. The services, manufacturing and agriculture sectors are anticipated to contract 3.7%, 3% and 1.2% respectively, according to the MoF.

Looking ahead at 2021, the MoF said the construction sector is expected to grow the most at 13.9%, followed by the services and manufacturing industries’ expansion of 7% each. The agriculture and mining sectors are anticipated to grow 4.7% and 4.1% respectively, the MoF said.

According to the MoF, Malaysia’s economy, as measured by gross domestic product (GDP), is expected to contract by 4.5% in 2020 before rebounding between 6.5% and 7.5% in 2021.

“A gradual economic recovery in the second half of 2020 (2H20) before normalising in 2021,” the MoF predicted.

On the construction sector, the MoF said the sector is expected to rebound by 13.9% in 2021 on account of the acceleration and revival of major infrastructure projects, coupled with affordable housing projects.

“The civil engineering segment will spur the recovery,” the MoF said.

On the services sector, the MoF said all sub-sectors within the industry are projected to grow in 2021 as economic activities normalise.

"New norms accelerate growth of the digital economy,” the MoF said.

Meanwhile, the manufacturing sector is forecast to rebound by 7% in 2021, driven by steady improvement in both the export and domestic-oriented industries.

“The E&E (electrical and electronics) segment is projected to accelerate in line with the digital transformation as WFH (work-from-home) and virtual communications become part of new business practices.

“Higher demand for integrated circuits, memory and microchips within the global semiconductor market will further support the [E&E] segment,” the MoF said.

For more stories on the Economic Report 2020/2021, click here.