KUALA LUMPUR – Malaysia’s gross domestic product (GDP) growth for the second quarter of 2021 (Q2 2021) could have been better if not for the disruptions due to the partial economic closure under Phase 1 of the National Recovery Plan (NRP) and various restrictions to flatten the Covid-19 curve.
In a research note today, PublicInvest Research said the 16.1% GDP growth in Q2 2021 was boosted by a low-base effect as the GDP had tumbled sharply to -17.2% in Q2 2020, when the whole world went into a pandemic-triggered shutdown.
“Output in Q2 2021 also received a boost following the roll-out of massive fiscal stimulus packages valued at RM530 billion (equivalent to 39% of the GDP), as well as monetary measures, where the benchmark interest rate has been kept at a historical low since July 2020.
“However, on a sequential basis, output dropped after it ticked 2.0% lower, a pullback against 2.7% growth in Q1 2021,” it said.
Meanwhile, Moody’s Analytics also believes that the sharp increase in Malaysia’s Q2 2021 GDP reflected the benefit of the low-base comparison.
In its note, it said the economy was showing signs of recovery, thanks to resilient foreign exports and moderately good retail sales early in the second quarter, but the late surge in the Delta Covid-19 variant infections disrupted the momentum.
“Exports have been a lifeline for Malaysia. It is the country’s top priority to safeguard manufacturing and foreign trade to support the sluggish domestic economy in the second half of the year.
“But the road to recovery is a protracted one, and Malaysia lacks the ammunition to go into a third month of lockdown in August,” it said.
The research firm noted that Bank Negara Malaysia had revised its 2021 GDP growth projection for the country downwards to between 3.0% and 4.0%, from between 6.0% and 7.5% previously.
“Our preliminary estimate for the September quarter yearly GDP growth reflects a downwardly revised view of economic conditions.
“We forecast full-year GDP of 4.7% in 2021, but in light of the fluid Covid-19 situation in Malaysia, the annual GDP forecast will likely be subjected to further downward revision in September,” it added. – Bernama, August 16, 2021
