RAM Projects Malaysia’s GDP at 3.8% for 2021

RAM Rating Services Bhd (RAM Ratings) has maintained its 2021 forecast for Malaysia’s gross domestic product (GDP) at 3.8%. The ramped-up vaccination rate in the country is expected to facilitate the reopening of most economic sectors in the fourth quarter, providing a healthy lift to growth according to RAM Ratings.

For 2022, the growth forecast is between 7% and 8%. The reopening of most sectors of the economy and gradual utilisation of domestic spare capacity should boost underlying growth. It was also noted that the continued recovery in global demand, particularly excess demand for semiconductors, will also assist Malaysia’s performance next year for 2022.

RAM Ratings noted that the overall output for 2022 is expected to recover above the level seen in 2019, estimated to be about 4.8% to 5.8% higher. “We estimate that the economy, in aggregate, would operate 5% below its potential output for next year,” said RAM Ratings.

This translates into about RM75 bil to RM85 bil less in output than could have been achieved without the fallout from the pandemic, it added.

The credit rating agency said the pace of vaccinations remains a key driver of domestic recovery, as is the continued recovery of the global economy.

“Exports are still the bright spot in the Malaysian economy, for which we project a strong rebound (2021: 11.1%; 2022: 4.6%) amid the semiconductor super cycle,” it said.

But conditions could be further enhanced if the new Government were to do the following:

(i) reverse the new MM2H scheme;

(ii) provide better incentives and assistance to SMEs;

(iii) engage actively with chambers of commerce;

(iv) waive income tax for SMEs for 2021;

(v) provide six months loan moratorium;

(vi) subsidize electricity bills, wages and rentals;

(vii) generate a positive, stable environment with parliamentary reforms, improved labour market conditions and easing of capital market requirements; and

(viii) work on other key issues on a bi-partisan basis.

The above is a big “ask” with the present Government who would appoint a former PM as Chairman of the National Recovery Council, when there are more qualified and competent people like Rafidah Aziz.

Source: https://my-news.online

Reference:

Ratings agency keeps M’sia GDP projection at 3.8% due to vaccination speed, Focus Malaysia, August 28, 2021 (https://focusmalaysia.my)