KUALA LUMPUR, Feb 10 — MIDF Research has forecast gross domestic product (GDP) to grow at 5.6 per cent year-on-year (y-o-y) for the fourth quarter (Q4) of 2021.
It said following the relaxation of lockdown restrictions, sentiment started to improve even from Q3 2021, with the increase in indices for consumer sentiment and business conditions.
“We expect GDP to rebound and grow by 5.6 per cent y-o-y in Q4 2021 from Q3’s -4.5 per cent y-o-y.
“For the full-year growth, GDP is estimated to grow by 3.7 per cent, compared with -5.6 per cent in 2020,” it said in its Economic Report, National Account Preview note today.
It noted Industrial Production Index (IPI) growth picked up as businesses resumed operations. IPI increased by 6.9 per cent y-o-y in Q4 2021, a strong rebound from the -1.1 per cent y-o-y contraction in Q3 2021.
The increased industrial output was in line with higher capacity utilisation as more workers who had been fully vaccinated returned to work and companies increased production to cope with the growing demand.
Besides, there were also higher distributive trade as spending recovered. Distributive sales picked up in Q4 2021, rebounding to +5.1 per cent y-o-y compared with Q3 2021 of -9.1 per cent y-o-y.
“The relaxation on people’s mobility and the continuation of interstate travels resulted in higher consumer spending and pent-up demand.
“Going forward, we expect growth outlook would be relatively better in 2022 as the economy will continue to expand, supported by the continued rise in consumer spending and investment activities,” said MIDF Research.
In addition, the research firm said growing external demand would also lend support to the growth outlook this year.
Nevertheless, it said there are several risks to the growth outlook such as possible worsening of the pandemic due to new variants, delayed recovery in the global supply condition, rising inflation, the slowdown in China, and policy withdrawals by major monetary authorities.
— Bernama
