KUALA LUMPUR, Nov 15 — CGS-CIMB Securities Sdn Bhd (CGS-CIMB) has lowered its 2021 gross domestic product (GDP) growth forecast from 3.9 per cent year-on-year (y-o-y) to 3.5 per cent y-o-y to reflect weaker-than-expected GDP performance in the third quarter of 2021 (Q3 2021).
The research house said following the progressive relaxation of containment measures since mid-August, economic activities and the labour market have been recovering from the trough in July, as reflected by the improvements in the monthly GDP contraction and the unemployment rate.
“That said, the recovery momentum is slated to resume in Q4 2021 with all states having transitioned into either Phase Three or Four of the National Recovery Plan (NRP), amidst the continuation of accommodative fiscal and monetary policies,” it said in a research note today.
It said the expansion of Covid-19 vaccinations to those aged below 18 and the administration of booster shots further strengthened the prospects of durable economic re-opening going forward, supporting its base case of a stronger economic expansion of 5.6 per cent next year.
Malaysia’s economy contracted by 4.5 per cent in Q3 2021, as opposed to the 16.1 per cent growth recorded in Q2 2021.
Meanwhile, Ambank Research has also revised its 2021 GDP growth projection to 3.5 per cent y-o-y, on the assumption that the Q4 2021 GDP would grow by 3.4 per cent.
It said the local economy would be reignited by the strong external trade, especially through the semiconductor and petroleum products upswing, elevated commodity prices and better management of the pandemic as well as vaccines, leading to the easing of pandemic restrictions.
The research house expects the situation to improve in Q4 2021, supported by the reopening of the economy.
“Most affected industries such as tourism and construction will start to rebound from its deep-trough business cycle,” it said.
It also said the digitalisation prospects seemed to remain strong, adding that the elevated commodity prices would also help to support economic growth.
However, it remained cautious on the possibility of the emergence of a new Covid-19 variant which could cause another round of lockdowns, as well as recent signs of surging inflation that would hurt spending, given that the underlying inflation is on the uptrend.
— Bernama
