KUALA LUMPUR, Feb 12 — RHB Banking Group has maintained its 2022 gross domestic product (GDP) growth forecast of 5.5 per cent year-on-year.

The Ministry of Finance (MoF) has forecast 5.5 to 6.5 per cent GDP growth.

Its chief economist Sailesh Kumar Jha said the overall outlook for growth in 2022 is neutral since the uncertainties related to the Omicron virus, inflation and gross fixed capital formation will remain in the first half of 2022.

“The second half outlook could improve as these event risks recede by then hopefully,” he said in a Chief Economist’s Insights report published Friday.

He said that given the recent rise in Covid-19 new cases, it remains to be seen how this translates to hospital occupancy rates, ICU rates and mortality rates over the next few weeks, particularly as the country exit the Lunar New Year holiday season and other festive holidays in early March.

The balance of risks is skewed towards localised movement restrictions ensuing and that the opening of international borders (which the National Recovery Council has recommended for March 1) could take a bit more time.

“It’s also unclear if the impact of the opening of international borders will translate into a rapid and significant pickup in international tourism in the first half. The evidence from other countries in Asia which have tried to open international borders and stimulate tourism has been mixed,” he said.

He said as core consumer price index (CPI) inflation doubles to around 2 per cent by mid-2022 and limited visibility on supply chain congestions exists, the path of consumer and corporate spending is likely to be modest in the first half.

Foreign labour supply issues linger and is a key constraint for the construction sector and gross fixed capital formation.

“Note also that the official data showed December retail sales slowed, industrial production slowed and the labour market report suggested a slowing of improvement in conditions,” he added. — Bernama