KUALA LUMPUR – The Malaysian economy is expected to recover in 2021 with growth likely to hover at 5.2% to 5.9%, supported by improving global gross domestic product (GDP) and trade, stimulus measures, and the Covid-19 pandemic’s containment and deployment of vaccines, AmBank Research said.
It said the overall investments, as well as the major economic sectors, were expected to improve.
“Thus, capital expenditure expansion will take place in 2021. However, the upside to 2021 growth will be dampened by the rise in Covid-19 cases and restrictive measures imposed in January,” it said in a note today.
The research house noted that the effect – which will be felt in the first quarter of 2021 – would be less impactful compared to the April 2020 restrictive measures.
“Still, we remain concerned over the micro-, small-, and mid-sized businesses. On that note, for the full year of 2021, the GDP is likely to hover around 5.2% to 5.9% in 2021.
AmBank Research said that – as expected – the GDP performed worse in the fourth quarter (Q4) of 2020 than in the previous quarter, impacted by the rise in the number of pandemic cases and restrictive measures imposed to contain the spread of the virus.
The Q4 GDP’s contraction of 3.4% year-on-year (y-o-y) was, however, within the research house’s expectations of between -3.2% and -3.5%, following a revised -2.6% y-o-y in Q3 2020.
“With three consecutive quarters of negative growth and the largest being in Q2 2020 at -17.1% y-o-y, the full-year GDP shrank by 5.6%, which is marginally higher than our -5.5% (forecast),” it said.
It was the biggest contraction since the -7.4% reported during the Asian financial crisis in 1998.
In addition, the nominal GDP fell by 6.3% due to the deflationary impact. – Bernama, February 15, 2021
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