Development Digest : Towards a Resilient Recovery

The impact of the pandemic is expected to lead to the first increase in global extreme poverty since 1998, effectively wiping out the progress made since 2017. Despite myriad challenges, there are encouraging signs that Malaysia is riding it out comparatively better. The country’s economy rests on strong fundamentals. A diversified economic structure, a sound financial system, an effective public health response and proactive macroeconomic policy support have all helped soften the blow. While we expect the economy to see a sharp contraction this year, with GDP shrinking by 3.1 percent—including a particularly pronounced contraction in the second quarter—and despite the enormous uncertainty over the timing of a return to economic growth, there is light at the end of the tunnel. The government has deployed a six-stage strategy to build resolve, resilience and to restart the economy. We have entered the fourth “recovery” stage, building the basis for the latter stages of revitalizing and reforming the economy. This means the government is set on not just getting out of this crisis but also trying to get into better shape than it was before, so it is more able to withstand the next one.