BASED on the available datasets which cover more than 80% of the Malaysian gross domestic product (GDP), CGS-CIMB Research now expects the country’s economy to expand 4.1% year-on-year (yoy) in 4Q 2021, rebounding from a 4.5% yoy contraction in 3Q 2021 while lifting the full-year GDP growth to 3.3% yoy in 2021.
The 4Q 2021 GDP data will be released tomorrow (Feb 11).
This follows a weaker pace of growth as the consumption rebound was not as strong as expected. The research house has previously expected an increase of 5.0% yoy for 4Q 2021 and subsequently 3.5% for 2021.
“We see weakness in government services as a key downside risk to our 4.1% forecast for 4Q 2021,” economists Nazmi Idrus and Lim Yee Ping pointed out in an economic update.
While the economic rebound came with the transition into Phase Four of the National Recovery Plan (NRP), the pace of recovery remained uneven across sectors, according to CIMB Research.
“Factors such as flash floods in late December 2021, a shortage of foreign workers and raw materials as well as inflationary pressures, likely affected the recovery momentum at end-2021,” opined the research house.
Meanwhile, Hong Leong Investment Bank (HLIB) Research expects Malaysia’s 4Q 2021 GDP to turnaround and expand by +3.6% yoy (consensus forecast: +3.1% yoy; 3Q 2021: -4.5% yoy) following the easing of most economic restrictions and reopening of interstate borders.
“Apart from construction and mining, other economic sectors are projected to post a recovery,” projected economists Felicia Ling and Goh Khing-Mae. “Should 4Q 2021 GDP print come in at our forecasted rate of +3.6% yoy, this would bring 2021 GDP to +3.1% yoy, lower than our initial forecast of +3.5% yoy but within Government’s forecast range of 3.0% to 4.0%.”
Moving forward, HLIB Research foresees positive growth momentum to sustain in 2022 with further normalisation of economic activities. While manufacturing activity may be affected by supply chain disruptions and raw material shortages, the sector is expected to continue its growth.
“The continued recovery in labour market and possible re-opening of international travel without quarantine would lend further support to the economy,” reckoned the research house.
“While headwinds may persist from continued virus prevalence leading to cautious sentiment among businesses and consumers, this may be partly mitigated by acceleration in booster vaccination and healthcare capacities sustaining at manageable levels.”
Against such positive scenario, HLIB reiterated its 2022 GDP forecast at +5.5% yoy (2021F: +3.1% yoy). – Feb 10, 2022
