Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz expects the decline to result from the implementation of the Movement Control Order (MCO) in the country.
“In April, Bank Negara Malaysia (BNM) expects the Malaysian economy to grow between -2 per cent and 0.5 per cent this year.
"That is based on the MCO for two weeks but the MCO has been extended for more than 2 weeks.
“We think the economy will drop by more than -2 per cent,” he told a press conference after a working visit to Port Klang Customs on Thursday.
However, he said it all depends on the government's efforts to address the COVID-19 pandemic.
He hoped that the reopening of the economy since May 4 could revitalise the country's economy.
“The economic sector has been gradually opened since the implementation of the first phase of the MCO.
“It depends on how we handle this COVID-19.
"The sooner we can deal with the COVID-19 crisis, the sooner we can rebuild the country's economy," he said.
In a similar development, Tengku Zafrul said the contraction of the economy would not affect the 12th Malaysia Plan (12MP).
"The 12MP will not be affected, but the 2021 Budget plan to be announced in October or November must take into account current economic factors," he said.
At the same time, he said the government had yet to determine the amount for Budget 2021.
Previously, the 2020 Budget was based on oil prices of US$65 per barrel.