SARAWAK’S economy is projected to grow between six and eight per cent next year, says Chief Minister Datuk Patinggi Abang Johari Tun Openg.
“The economy will gradually recover once the Covid-19 pandemic situation improves, driving both domestic and external demand,” he said at the DUN sitting on Monday (Nov 9).
The economy is expected to contract between 3.5 per cent and five per cent this year, with the worst hit being the tourism and manufacturing sectors.
Abang Johari said the decline in tourism had spilled over to other sectors, particularly transport and logistics, hotel and accommodations, wholesale and retail as well as food and beverages.
“For the first nine months of this year, visitor arrivals contracted by 64.1 per cent due to travel restrictions and closure of international borders.
“The services sector is expected to register a negative growth of 1.4 per cent in 2020. We anticipate that the tourism industry will take some time to fully recover.”
Meanwhile, the manufacturing sector is projected to contract by 6.9 per cent this year, the mining sector — contract to 2.9 per cent, construction sector — negative growth of 9.5 per cent, and agriculture sector — contract by 1.5 per cent.
“For the first five months, production of palm oil contracted by negative 2.1 per cent before it gradually picked up starting June this year. With the easing of the Covid-19 lockdown, the palm oil industry is gradually recovering entering the second half of the year, supported by improvement in global consumption.
“The 100 per cent exemption from export duty on crude palm oil, crude palm kernel oil and processed palm kernel oil starting July 1 to Dec 31 under the Penjana initiative further adds to the increasing demand, notably from China and India.”
On the demand side, Abang Johari pointed out that the state’s trade contracted by 20.9 per cent for the first eight months of this year, with both export and import experienced double-digit contraction of 24.8 per cent and 12.1 per cent respectively.
He also said private investment was expected to contract by 11.3 per cent, while growth in public investment was projected to drop significantly.
“However, public consumption is projected to expand at 33.6 per cent with higher spending on supplies and emoluments. More spending, particularly on the Covid-19 measures by both the Sarawak and federal government are expected to contribute to the growth in public consumption.
“On the other hand, private consumption is projected to decline by 1.9 per cent as the movement control order has largely affected household spending, resulting in widespread income losses across wide spectrum of business sectors.”
Touching on inflation, Sarawak recorded a negative 1.6 per cent inflation rate in the first nine months. Notwithstanding the negative inflation, the decline in prices was not broad based. For the whole of this year, it is expected that the rate will be between negative 1.5 per cent and negative 2.0 per cent.
“Based on the record from Labour Department of Sarawak, there are 72,251 vacancies reported from January until September this year.
“It is noted that, there are a total of 1,956 retrenchments, which were mostly found in the hotels and restaurant, wholesale and retail, and construction sectors. We foresee that there will be a rise in unemployment rate to between 5.0 and 5.5 per cent.”
