Maybank IB expects economy to grow by 5.1% in 2021

KUALA LUMPUR – The Malaysian economy is expected to grow by 5.1% this year compared to last year’s 5.4% contraction as the country’s recession is shallowing amid the third wave of COVID-19.

Maybank Investment Bank Bhd (Maybank IB) chief economist Suhaimi Ilias said the forecast was conservative relative to the current official forecast of the smaller decline of 4.5% last year with the economy to grow between 6.5% to 7.5% in 2021.

“The third wave of Covid-19 which has caused a spike in cases will continue to be a downside factor.

“However, as of the latest data in December 2020, manufacturing, technology and finance are joining healthcare in the recovery process, while tourism-related services continue to lag,” he said at a virtual Maybank Wealth Talk themed New Decade, New Cycle, New Market Environment today.

On the pandemic, Suhaimi said the introduction of restrictions and lockdowns in recent months has raised concerns about the impact on the economy, especially given the inverse relationship last year between the gross domestic product (GDP) globally and Malaysia.

“The restriction has affected mobility and the investment bank does see the strong correlation between GDP and mobility.

“As to our estimate, under MCO 2.0, almost 80% of the economy is operational and the ratio will rise up further compared to the first MCO. The estimated daily economic losses is not as big as MCO 1.0, and we are maintaining our official forecast of 2021 real GDP growth, of 4.1%,” he said.

On gold outlook, Maybank Global Banking’s FX research and strategy head Saktiandi Supaat said the safe haven asset started the year lower after hitting a record-high of US$35,000 (RM142,300) per ounce in August last year.

He said the decline was due to the US treasury yield and Covid-19 vaccine progress, given a bit of contraction.

“Hence, we will likely see further volatility on gold due to movement of US treasury yield in 2021 and in our view, there will be opportunity for gold to be traded between US$18,000 and US$200,000 per ounce this year,” he added. – Bernama, February 6, 2021