Malaysia: Covid spike ‘will lead to slower growth in GDP’
Malaysia’s gross domestic product (GDP) growth for 2021 is predicted to be 5.7%, not 6.7% as forecast earlier in the year.
HSBC Group said the downgrade was because of the third wave of coronavirus that hit the country in January, prompting the government to issue a stay-at-home order known as Movement Control Order (MCO).
HSBC’s chief economist for ASEAN market, Joseph Incalcaterra, said: “The outbreak at the beginning of the year did have an impact on the rosy growth outlook. We had to trim the GDP forecast down a little bit to 5.7% this year, which is slightly below the government's projection.”
However, Incalcaterra was optimistic about Malaysia’s economic recovery, which he said would be underpinned by strong exports, foreign direct investment commitments and the country’s Covid vaccination programme. He said: “I think the key focus is the momentum of growth rebound in the second quarter given that the MCOs have ended, so we should see a strong momentum for the quarter.”
The International Monetary Fund (IMF) recently projected Malaysia’s growth to rebound to 6.5% in 2021, driven by strong recovery in the manufacturing and construction sectors, and the impact of the vaccination rollout. The IMF also expects the country’s unemployment rate to drop to 3.8% in 2021.