Malaysia’s democratic liberalization ended when Prime Minister Mahathir Mohamad resigned, and the multiethnic government collapsed in February 2020. Former Minister of Home Affairs, Muhyiddin Yassin, was appointed Prime Minister, and a power struggle led to the formation of a new government. On January 12, 2021, parliament was suspended after the national emergency proclamation to contain the COVID-19 pandemic.

Malaysia’s economic transformation was strongly affected by the political turmoil and the economic hardship caused by the COVID-19 pandemic. Overall public debt increased in 2020 by 3.5% of GDP and overall GDP shrank by 5.6% in 2020, the biggest contraction since the 1998 Asian Financial Crisis.

Since the pandemic outbreak, the government concentrated its effort on softening the economic consequences for the Malaysian population. In 2020 alone, the government announced stimulus packages worth 21.2% of GDP. The release of the 12th Malaysia Plan (2021-2025), initially scheduled for 2020, was postponed after the outbreak of COVID-19.

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