This ninth edition of the Development Digest entitled ‘Towards a Resilient Recovery’ focuses on how Malaysia can drive its economic recovery from the COVID-19 pandemic in inclusive and sustainable ways. It starts off by examining how the pandemic is changing the face of poverty in Malaysia and how economic recovery and the protection of livelihoods – in light of certain costs and trade-offs – can be better promoted.
Looking beyond the pandemic, the edition also shares development lessons drawn from Malaysia’s journey towards becoming a high-income and developed nation. These lessons flow from a range of development sectors including disaster risk management (DRM), capital market development, and green financing. The article on DRM focuses on how Caribbean countries have learned from Malaysia’s experience with state-owned enterprises (SOEs) and how they can support fiscal resilience and sustainability during natural disasters.
Other topics related to Malaysia’s future development challenges include sustainable finance, population aging (and its impact on Malaysia’s macroeconomy, fiscal position, labor market, social protection system and aged-care services) and innovation to spur greater productivity growth and job creation.
As this edition marks the beginning of a new five-year phase for the World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia, it includes an overview of the development partnership between Malaysia and the World Bank Group and its aim to ‘maximize knowledge for development.’
- Malaysia and the World Bank Group – A New Phase: By Firas Raad
- Recover, Revitalize and Reform After the Storm: By Ndiame Diop
COVID-19 was both unprecedented and a perfect storm to hit the world economy in 2020. By our estimates, 90% of the world’s economies will expect to see a contraction this year. This severe downturn means countless people across the world, including in Malaysia, will suffer illnesses, lose jobs and livelihoods. How then, can countries recover and build resilience after this storm? - From Vulnerable to Pandemic Poor By Kenneth Simler
The COVID-19 pandemic has taken a toll on everyone’s lives. In doing so, it has changed the face of poverty and vulnerability the world over. From the direct health impact of the disease to the wide-reaching economic effects on individual livelihoods, even countries spared from COVID-19 cases are suffering. - Costs and Trade-Offs in the Fight Against the Covid-19 Pandemic: By Norman Loayza
The economic fallout has been immense, with dire consequences for poverty and welfare, particularly in developing countries. As the restrictions are gradually eased, the challenge will be to revive the economy while mitigating new waves of infection. Having more limited resources and capabilities but also younger populations, developing countries face different trade-offs in their fight against COVID-19. How can countries balance this precarious task? - Defending Livelihoods: Responses to Covid-19 By Achim Schmillen, Alyssa Farha Jasmin, Amanina Abdur Rahman
As Malaysia faces the COVID-19 pandemic, the battle is on to defend the welfare and livelihoods of people in the bottom 40% of household income. These include street vendors, microentrepreneurs, artists and other informal workers who have been gravely impacted by the crisis. Supporting them requires catching Malaysians at risk of falling through the cracks. How did Malaysia’s economic response to the pandemic protect this crucial yet vulnerable segment of society? - Causes and Impacts of Job Displacements and Public Policy Responses By Achim Schmillen
The rise in joblessness due to COVID-19 is projected to be extraordinarily steep. In response, governments have implemented a range of measures to financially compensate displaced workers, assist them in finding reemployment, or both. Job losses have significant economic, social, and psychological consequences; laid-off workers often lack the skills or geographic proximity to easily transfer to sectors that are growing, and providing adequate support can be expensive. Careful public policy responses can help mitigate the costs of job displacements and support workers in finding productive reemployment. - Recovery from the Pandemic Crisis Balancing Short-Term and Long-Term Concerns By Norman V. Loayza, Apurva Sanghi, Nurlina Shaharuddin, Lucie Johanna Wuester
The COVID-19 pandemic crisis combines the worst characteristics of previous crises. It features a simultaneous supply and demand shock; domestic, regional, and global scope; a projected long duration; and a high degree of uncertainty. Sustained economic recovery is possible only when the underlying causes are addressed, and the foundations of growth are protected. - Disaster preparedness and State-Owned Enterprises: How Caribbean countries learned from Malaysia: By Ruxandra Burdescu, Jana Kunicova and Joy Ten Berge
When disaster strikes, state-owned enterprises (SOEs) can provide a layer of defense for fiscal resilience and sustainability when resources become scarce. Creating effectively managed SOEs are then crucial in ensuring this robust line of defence. - What Will It Take for Malaysia To Become A High-Income And Developed Economy? By Mahama Samir Badaogo
Malaysia is likely to make the transition from an upper middle-income economy to a high-income economy within the next few years, despite the setback of the COVID-19-induced recession in 2020. Preparing for this imminent achievement, there are lingering questions concerning the speed of Malaysia’s economic growth, its quality, and its sustainability. - How to Make Progress In The Fight Against Corruption: By Rajni Bajpai and Bernard Myers
People have been either fighting corruption or have been victims of it for decades. So, should we accept it as a feature of life and carry on or try to fight it where we can? While developing our global report, which was released last week, we tried to delve deeper into how countries are making progress in addressing corruption. The case studies identified show how reform-minded governments and civil society organizations have contributed to reducing corruption in their specific contexts or laid important foundations that can be built on by others. - Defining green: Malaysia’s big step towards sustainability: By Farah Imrana Hussain
Climate change presents both risks and opportunities for financial institutions and the financial system as a whole. Banks lend to many industries that are physically affected by extreme weather events caused by climate change. Rising sea levels, changing weather patterns and severe flooding can destroy infrastructure, disrupt supply chains, and affect the ability of borrowers to repay loans. - How Malaysia achieved a thriving domestic bond market By Ana Maria Aviles and Ang Swee Ee
Local currency bond markets are increasingly relevant for emerging markets and developing economies (EMDEs), not just to support a country’s development but also to strengthen its resilience to external shocks. Few EMDEs have succeeded as well as Malaysia in developing its domestic bond market. With a market size of roughly 98 percent of GDP, the country ranks third in Asia – just behind well-developed markets like Japan and the Republic of Korea. - A Silver Lining: Productive and Inclusive Aging for Malaysia : By Achim Schmillen, Alyssa Farha Jasmin, Amanina Abdur Rahman
2020 is a crucial milestone for Malaysia, as the country becomes an aging society. It follows the path of many others that have progressed from low- to upper middle- or high-income economies. Fueled by low mortality and fertility rates, how can the country ensure its aged population is included in its economic development? - Leveraging Public Research to Boost Innovation: By Smita Kuriakose
The transition to a more innovation-based growth model is even more urgent in the current uncertain global context. Slowing growth in global trade and shifts in its patterns, and rapid technological change present challenges to sustaining productivity and economic growth. The key challenge today in Malaysia is, therefore, how to facilitate and accelerate the transition to this innovation-based growth model, and what policies and institutions could more effectively encourage innovation, technology adoption and commercialization of research. - A New Model for Maximizing Knowledge for Development: By Tan Mei Ling
The World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia is bringing development experience to low-income and developing economies. Over the years, the World Bank Group has recognized the crucial importance of knowledge sharing and countries peer-to-peer learning as a third pillar, in complementing development finance and technical assistance for the Bank to achieve its development goals of ending extreme poverty and building shared prosperity.