KUALA LUMPUR, May 7 — RAM Rating Services Bhd expects Malaysia’s year-on-year (y-o-y) economy to rebound in the second quarter of 2021 (2Q21), particularly from the preceding year’s low-base effects.
It said the spike in Covid-19 infections and the re-imposition of movement control order (MCO 3.0) in many key economic centres represented major downside risks to Malaysia’s gross domestic product (GDP) growth as they suppress consumer confidence and household spending.
“We are maintaining our 2021 GDP growth projection of 5.0 per cent for now given the slew of uncertainties such as the uptrend in Covid-19 cases, the pace of the national vaccine programme, the emergence of new virus strains and still-weak labour market conditions.
“All said, Malaysia’s success in controlling the spread of the coronavirus in 2Q21 while upholding the encouraging momentum in the first quarter may shore up economic growth this year,” it said in a statement today.
RAM estimated Malaysia’s GDP to contract 2.1 per cent in the first quarter of 2021 amid MCO 2.0.
Nonetheless, this contraction, which is the fourth consecutive quarter of decline, is expected to be slightly less pronounced than the preceding quarters’ (4Q20: -3.4 per cent; 3Q20: -2.7 per cent).
This is because most economic activities had been allowed to continue despite social restrictions, while strong external demand boosted industrial output during the quarter.
The government’s various income-supporting policies are also seen to have somewhat mitigated the fall in consumption.
RAM envisaged the manufacturing sector as the main growth driver in 1Q21, with a 6.8 per cent expansion (4Q20: 3.0 per cent).
This sector’s operational capacity, as indicated by the Industrial Production Index, continued to climb during the quarter.
Buoyed by the recovery of external demand, overall exports surged 31.0 per cent in March (February: +17.6 per cent). — Bernama
