KUCHING: Malaysia’s economy has been projected to rebound back to positive growth this year supported by the recovery in the domestic and global economic activities, and due to the low base last year.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) recently revised its projection of gross domestic product (GDP) growth to 5.4 per cent, a slower rebound than what it predicted earlier.
This was after taking into account the impact of the Movement Control Order (MCO) 2.0 on the GDP growth in the first quarter of 2021 (1Q21).
“Because of the weaker business confidence, we foresee a temporary setback to the labour market recovery as firms may hold back hiring in anticipation of weaker business performance due to the movement control,” MIDF Research said.
“Like other countries, Malaysia’s economy is projected to rebound back to positive growth this year supported by the recovery in the domestic and global economic activities, and also due to the low base last year.”
Looking ahead, MIDF Research expected business confidence to improve when more restrictions on the economy can be relaxed especially if the rate of Covid-19 infectivity can be further reduced in the coming months and more people getting vaccinated going into the latter half of the year.
The research arm gathered that containing the pandemic and improving public health will be the priority for now.
“As the vaccination programme has been initiated recently, we foresee more restrictions can be further relaxed.
“However, it will be subject to success to further reduce the number of new Covid-19 infections and active cases.
“At least we foresee consumer spending could increase following the recent relaxation on intra-district travels and permission to dine-in at restaurants, and economic activities to generally pick up in states which are no longer placed under MCO 2.0.”
However, MIDF Research opined that the future pace of growth and recovery could be constrained by downside risks such as renewed resurgence in Covid-19 infections and potential delays in vaccine distribution.