THE Malaysian economy grew by 16.1% in 2Q 2021 (1Q 2021: -0.5%) with economic performance supported mainly by improvement in domestic demand and continued robust exports performance.
According to Bank Negara Malaysia (BNM), the strong growth also reflected the low base from the significant decline in activity during 2Q 2020.
“Economic activity picked up at the start of 2Q 2021 but slowed down thereafter following the re-imposition of stricter containment measures nationwide under Phase 1 of the full movement control order (FMCO),” the central bank pointed out in a statement.
“All economic sectors registered an improvement, particularly the manufacturing sector. On the expenditure side, growth was driven by higher private sector spending and strong trade activity.”
Moving forward, the country’s growth trajectory will depend on the ability to contain the COVID-19 pandemic and materialisation of health outcomes from the nationwide vaccination programme.
This will allow economic sectors to gradually re-open and provide some lift to household and business sentiments. Against such backdrop, the Malaysian economy is projected to expand between 3% and 4% in 2021.
“The new growth projections are lower compared to the previously-announced growth range (6%-7.5%) due in large part to the re-imposition of nationwide containment measures,” the central bank pointed out.
“Nevertheless, the expected re-opening of the economy would support a gradual recovery in 4Q 2021 with higher global growth and sustained policy support providing a further lift to economic growth.”
The recovery is expected to accelerate further going into 2022, supported by a gradual normalisation of economic activities as well as the positive spill-overs from continued improvement in external demand.
In projecting the revised growth range for the year, BNM said it took into account the latest global economic developments, the implementation of the first phase of the National Recovery Plan (NRP), and assumptions on the gradual transitions to the second, third and fourth phases for each state based on the pace of vaccination rollouts, and healthcare system capacities.
On the exchange rate front, BNM noted that the depreciation of the ringgit against the US dollar was in line with the performance of most other regional currencies amid the broad strengthening of the greenback.
“Going forward, as uncertainties linger around the momentum of global and domestic economic recovery, the ringgit is expected to continue to be exposed to periods of heightened volatility,” projected the central bank.
Since July 1, the ringgit has depreciated by 2% against the greenback to RM4.235/US$ (Aug 13). – Aug 13, 2021
