IF the roll-out of additional Government measures earlier this month has taught anything, it shows that Malaysia’s economic recovery journey will be nothing less than bumpy.
Keeping that in mind, UOB Malaysia advise investors to remain cautiously optimistic when it comes to corporate earnings this year, despite the promising developments of the COVID-19 vaccines that managed to inject a certain level of optimism into the financial markets.
According to the UOB managing director and personal financial services country head Ronnie Lim, a full-scale global recovery might call for worldwide distributions of the vaccines, complemented by continued government stimulus.
“We believe that countries and industries that are supported by ongoing government stimulus can recover strongly this year, especially if COVID-19 vaccinations start by the middle of the year.
“As more people around the world are vaccinated, governments can slowly lift pandemic-related movement and travel restrictions, which will help the global economy to rebuild gradually in the second half of 2021,” he said in a statement today.
Lim said central banks would continue to keep monetary policies loose to support the economic recovery.
“However, UOB expects the recovery chart to show diverging paths because some regions and sectors will emerge from the recession sooner and in better shape, while others that have been hit harder will recover more slowly.
“For example, industries such as e-commerce, electronics, technology, gaming apps and services, and pharmaceuticals are thriving amid the pandemic.
“With low interest rates and higher economic growth, we expect corporate earnings to recover from 2020 levels this year,” he said.
Meanwhile, UOB expects Malaysia’s gross domestic product (GDP) to grow by 5% this year and will likely have to wait until at least 2022 to see a return to pre-pandemic levels.
“Assuming the affected states will be under strict movement control order (MCO) until the end of February, with essential business sectors operating with only up to 70% capacity, Malaysia may suffer an estimated economic loss of RM12 bil in 2021,” he explained. – Jan 29, 2021
