KUALA LUMPUR, Nov 12 — OCBC’s treasury research unit has revised its forecast for Malaysia’s gross domestic product (GDP) growth for 2021 to 3.2 per cent from 3.6 per cent previously.
“Owing to the third quarter (Q3 2021) GDP miss, we see lower growth for the full year and we are of the view that the recovery pace may not be as robust as assumed by the government.
“Malaysia’s GDP slipped 4.5 per cent year-on-year in Q3 due to the impact of the Covid-19 pandemic and extended lockdown. We see growth coming in at a more conservative 5.0 per cent year-on-year in 2022, higher than our previous forecast of 4.3 per cent in part due to the deeper base effect from this year,” the research house said in a note today.
Overall, OCBC said even though the data was obviously a miss and is a constant reminder of the havoc that the virus can still cause to the economy, “Malaysia is in an undoubtedly better place now in large part due to the high level of vaccination rate that should offer the economy at least some immunity from future resurgence bouts.”
Echoing the more downbeat sentiment, MIDF Research also revised downward its 2021 GDP growth forecast to 3.7 per cent as the recovery has been slower than expected.
“Taking into account the larger than expected drop in the third quarter GDP growth, we revise down our growth projection for 2021 to 3.7 per cent from 4.6 per cent previously,” it said.
Although growth momentum will be improving from the fourth quarter as the economy returns to the recovery path coming out from the full lockdown, the research house is cautious on the strength of the recovery as the improvement in the real economy seems to be more gradual.
“A potential weakness in external demand, high commodity prices, and prolonged global supply chain disruptions could also affect the near-term growth outlook.
“Nonetheless, we foresee that growth prospects will improve given the reopening of the economy and the expected recovery in domestic spending activities,” it said in a note today.
MIDF also said that business activities would also increase as firms ramp up production to cope with the improving domestic demand and sustained growth in exports.
“For next year, the recovery momentum will be stronger as this year’s growth has been much weaker than anticipated, unfortunately, (as it has been) derailed by the resurgence of Covid-19 infections and the imposition of lockdowns,” it added. — Bernama