Islamic Finance

Malaysia lockdown to impact growth, deficit targets, says finance minister

Published 01 Jun,2021 via Bloomberg Markets - Malaysia will revise its economic growth and fiscal deficit forecasts as it begins a two-week lockdown to fight a surge in Covid cases, said Finance Minister Tengku Zafrul Abdul Aziz.

The government may have to borrow more to fund the $9.7 billion plan announced by Prime Minister Muhyiddin Yassin late Monday, Zafrul said at a briefing Tuesday, adding the announcement on the new estimates will be made soon.

Malaysia’s economy contracted for the fourth straight quarter in the first three months of 2021, albeit at a slower pace. The government and the central bank expect GDP to expand 6%-7.5% this year after a 5.6% contraction in 2020. The fiscal deficit is projected by the government at 6%.

Benchmark 10-year sovereign bond yields dropped one basis point to 3.24%, while the ringgit and the benchmark equity index traded little changed.

“The bond market is somewhat concerned about the risk of a widening in the fiscal deficit, which could result in higher bond supply,” said Winson Phoon, head of fixed-income research at Maybank Kim Eng Securities Pte. in Singapore. “But subsequent to the stimulus package announcement yesterday, investors took comfort from the fact that the measures are largely non-fiscal.”

The government will need a few days to ascertain the daily cost of the restrictions, Zafrul said. A similar lockdown in 2020 cost the country an estimated 63 billion ringgit.

(Updates with analyst comment in fifth paragraph.)

More stories like this are available on

©2021 Bloomberg L.P. All Rights Reserved. Provided by SyndiGate Media Inc. (


DISCLAIMER: This content is provided to us “as is” and unedited by an external third party provider. We cannot attest to or guarantee the accuracy of information provided in this article from the external third party provider. We do not endorse any views or opinions included in this article.   


Author Profile Image
Anisah Shukry