KUALA LUMPUR, Jan 11 ― Malaysia’s high Covid-19 vaccination rate has laid the foundation for the recovery of South-east Asia’s third largest economy this year, according to Standard Chartered Bank.

The paper titled "Still battling headwinds” released today offers the bank’s global economic outlook for 2022 and forecast that Malaysia’s gross domestic product (GDP) will grow 6.2 per cent this year from 3.5 per cent in 2021.

"We see the economy moving back towards trend growth in 2022, with a high vaccination rate limiting the risk of severe lockdowns, barring the emergence of a very challenging variant.

"As of mid-November, 76 per cent of the population was fully vaccinated,” the paper said.

The research noted that Malaysia’s economic growth has been bumpy since the fourth quarter of 2019, when the GDP stayed below 6 per cent.

"Unevenness across sectors persisted throughout 2021, with economic activity in 13 out of 21 sectors remaining below pre-pandemic levels as of the third quarter (Q3),” it said.

However, the research paper projected that Malaysia’s economy will be able to recover well due to global demands and the reopening of many external markets this year – even if new variants of the Covid-19 virus prove to be troublesome.

It said that domestic demand is also likely to catch up, and predicts private consumption to rise 8 per cent year-on-year (y-o-y), supported by relaxations in movement curbs, improved job prospects and better wage outlook.

"Investment activity should also pick up strongly with improved clarity on domestic economic reopening and higher construction activity. As of Q3-2021, overall investment was 22 per cent below the Q4-2019 level.

"Disbursed loans (excluding household and FI loans) rose 32 per cent y-o-y in Q3, with the bulk of loans disbursed to the manufacturing sector,” it said.

The research paper also said that public investment should be supported by high budget allocations and ongoing projects such as the Mass Rapid Transport and Light Rapid Transport lines and digital infrastructure.