Malaysia’s Economy to Rebound in 2Q21?

RAM Rating Services (“RAM”) expects Malaysia’s economy to rebound in second quarter (2Q). And they have accounted for rise in Covid-19 injections and re-imposition of MCO 3 in their forecast.

RAM is maintaining GDP growth of 5.0 per cent for 2021.

Meanwhile, AMRO – the macroeconomic research office of ASEAN+3 – expects an upswing of 5.6% owing to a low base and the strong pick-up in global demand induced by vaccination programmes.

All this sounds very promising, but Q1 results were weak and Q2 with MCO 3.0 is not expected to rebound strongly. Export markets – U.S., China – have improved significantly but that’s because they are well ahead of us in vaccination.

But if the Government were to do a more selective, targeted MCO and continue stimulus, then perhaps a better outcome could be realized.

AMRO is projecting 6.2% growth for 2022 with herd immunity in Malaysia and abroad achieved. Let’s hope that these “prophets” of “green shoots” may realize their forecasts.

 For me, a 4% growth in 2021 would still be great! Why? Although exports have improved significantly, domestic consumption is constrained. Sales are below by 20-30% compared to pre- pandemic levels—never mind about Hari Raya! Nevertheless, remain positive!

Reference:

1.     RAM Rating expects Malaysia’s economy to rebound in 2Q21, 7 May 2021, Malay Mail

2.     Malaysia is well-positioned for a strong vaccine-led recovery but ... 4 May 2021, Focus Malaysia

3.     Sulhi Khalid, Malaysia's GDP growth could dip to 4% on MCO 3.0, slow vaccination and Covid-19 resurgence — SERC, 7 May 2021, The Edge