KUALA LUMPUR, Nov 6 (Bernama) -- The Malaysian economy has experienced a relatively rapid growth during the last four decades and has also undergone a structural transformation, from agriculture-based economy, diversification has proceeded to the next extent that services and manufacturing have become the engine of growth.

The Finance Ministry (MoF) said the agriculture sector is expected to turn around by 4.7 per cent in 2021, supported mainly by higher production of palm oil and rubber.

“The oil palm subsector is anticipated to rebound following improvements in global demand, particularly from China and India,” it said in its Economic Outlook 2021 report released today.

It said crude palm oil (CPO) is projected to remain stable with higher demand following a recovery for the hotel, restaurant and catering operators as well as higher biodiesel mandate in Indonesia and Malaysia.

However, the agriculture sector contracted 3.9 per cent in the first half 2020 due to lower growth of oil palm and rubber subsector following supply distributions.

“The oil palm subsector was affected even before the pandemic, attributed to dry weather and cutbacks in fertilisers by smallholders in 2019,” it said.

Meanwhile, MoF said the rubber subsector also declined due to unfavourable weather and low rubber prices; however, it is expected to surge as global demand for natural rubber increases in line with the expansion of the automotive industry.

In addition, the agriculture sector was further affected by the Movement Control Order, which led to lower production across most of the subsector.

“The sector is anticipated to rebound by 1.4 per cent in the second half of the year driven by the recovery in oil palm subsector.

“The output of livestock and other agriculture subsectors are also expected to expand, supported by stable demand for food items, primarily during festivities. Hence, the agriculture sector is projected to decline by 1.2 per cent in 2020,” MoF said.

Further, the production of livestock and other agriculture and fishing is also expected to improve in line with various government’s initiatives in modernising the agro-food subsector. These initiatives include integration of agriculture technologies, such as agro-robotic, sensor, precision farming, drones, agriculture data development and Internet of Things (IoT) applications.

“The government efforts to increase domestic food production in ensuring food security are expected to continue to sustain the growth of the subsector,” MoF added.

-- BERNAMA