KUALA LUMPUR: Malaysia's gross domestic product (GDP) is projected to expand 4.3 per cent this year and 6.1 per cent in 2022, according to the Organisation for Economic Cooperation and Development (OECD).
OECD secretary-general Mathias Cormann said like countries all around the world, Malaysia continued to face serious challenges as a result of the pandemic and the more contagious Delta variant had made the public health situation even more difficult.
Cormann said the government had made great progress with its vaccination campaign and achieving high vaccination rates would strengthen Malaysia's resilience, in particular in the event that new waves of contamination with new variants occur across the world.
"Provided that the vaccination campaign advances as planned, the OECD projects GDP growth to reach 4.3 per cent in 2021 and 6.1 per cent in 2022
"This strong rebound has been made possible as a result of Malaysia's decisive economic policy response, which included nine successive fiscal policy support packages, supportive monetary policy, and a resilient financial system," he said at the virtual press conference of OECD Economic Survey of Malaysia 2021.
OECD director of economic country studies Alvaro Pereira said OECD was certainly confident of its forecast right now, rather than a few months ago because it has seen more targeted restrictions in Malaysia.
"Exports in Malaysia are very strong, thus we are very positive going forward. We know that there are a lot of risks and unprecedented events that could happen, but the more data we get , the more we believe that Malaysia is on the right track," said Pereira.
The OECD's third Economic Survey of Malaysia said high unemployment in the wake of the crisis posed a challenge, along with weak productivity growth.
The survey said in the short-term, accelerating the vaccination programme was crucial and policy support for people and firms should continue until the recovery is well-established.
"Malaysia should then resume its pre-pandemic efforts to boost productivity by easing regulatory and administrative burdens and accelerating firms' adoption of digital technologies.
"Over the medium-term, a fiscal consolidation strategy will be vital to reduce public debt and prepare for growing health and economic costs from Malaysia's ageing population," it said.
The survey also recommends accelerating Malaysia's digital transformation by improving digital infrastructure, developing workers' Internet skills and encouraging small firms – particularly older ones – to adopt new technologies that can stimulate innovation.
"Malaysia is a business-friendly country, which attracts large flows of foreign direct investment and is well-integrated in global value chains.
"Nonetheless, further reforms to ease regulation and expand the digital economy will be essential to drive growth in the post-pandemic world and to ensure Malaysia fully benefits from today's digital opportunities," said Cormann.