KUALA LUMPUR: Economists are optimistic that Malaysia’s financial system is poised for a strong recovery in 2022.
However, they emphasised that a lot will rely on how the nation manages its degree of Covid-19 infections.
Sunway University economics professor Dr Yeah Kim Leng stated there are actually extra palpable sentiments and higher confidence that the financial recovery might be extra sturdy and sustainable in 2022.
“This is a natural progression of the country transitioning to Phase 4 of the National Recovery Plan, where all sectors of the economy are allowed to operate, movement restrictions lifted and gatherings allowed with prescribed public health protocols or operating procedures.
“Barring a recurrence of the nationwide movement restriction orders, which is less likely given that the population is almost fully vaccinated, the expected recovery in domestic consumption and investment activities, coupled with the ongoing export-led expansion, are expected to sustain a gross domestic product (GDP) growth of 6% in 2022,” he advised StarBiz.
Besides the bottom impact, Yeah stated the stronger home and exterior demand will contribute to optimistic development.
“However, the national income will only be slightly higher than pre-pandemic levels in 2019,” he added.
Meanwhile, Malaysia University of Science and Technology professor Geoffrey Williams stated development might be depending on how the nation handles the Covid-19 state of affairs.
“I think the biggest risk is an overreaction to the Omicron variant and a stricter approach to enforcement, or further travel restrictions and even lockdowns.”
He famous that some nations such because the UK have begun tightening restrictions.
“This is dangerous in economic terms. The hope is that we do not see that here in Malaysia.
“Other factors such as the political environment are normal issues. But if Covid-19 restrictions affect international trade, this can hold back exports as a growth driver for Malaysia.”
Malaysia’s exterior commerce continued its stellar efficiency in November 2021, with a year-on-year growth of 34.9% to RM205.5bil, breaching the RM200bil mark for the second time in a row.
It was additionally the tenth consecutive month of double-digit development since February 2021.
According to knowledge by the International Trade and Industry Ministry, exports rose by 32.4% to RM112.2bil, the fifteenth consecutive month of year-on-year growth since September 2020.
Imports had been 38% increased at RM93.3bil and commerce surplus elevated 10.5% to RM18.9bil.
Meanwhile, Yeah stated the brand new Covid-19 variant, if confirmed to be much less deadly, might not dent the projected GDP development for Malaysia.
“It will certainly not derail the recovery momentum, as long as there are no widespread lockdowns and movement restrictions.
“The general election may spur campaign-related spending and boost the local economy but it may put on hold investment activities of investors who are averse to political uncertainties.”
Yeah stated the Malaysian inventory market will probably reply rapidly as buyers stay cautious of latest Covid-19 waves, as within the case of the Omicron variant when it was first detected.
“While rising infections are prompting authorities to consider tighter measures in the United States and Europe, the rollout of booster shots and increase in hospitalisation capacity suggests that the world is better prepared to face new variants and higher community immunity.
“Hopefully, there will no longer be restrictive measures such as those that were imposed during previous waves that shocked the economy,” he stated.
Separately, Hong Leong Investment Bank (HLIB) Research stated in a report that the Malaysian financial system is anticipated to develop past 5.5% in 2022.
“This sits at the lower end of the Finance Ministry’s official target of between 5.5% and 6.5%, reflecting fluidity of the virus’ evolution to the economy.
“With the need to drive economic recovery, we feel the more gradual pace of projected fiscal consolidation is realistic.”
Bank Negara is anticipated to start its upward normalisation within the in a single day coverage fee from the fourth quarter of 2022, in line with HLIB Research.
“We expect a 25-basis-point hike to 2%, given our view that economic conditions would be more entrenched by then while GDP would have also recovered to pre-pandemic levels.
“Furthermore, we project inflation to be more modest in 2022 with the consumer price index forecast at 2%, versus 2021’s 2.4%, on expectations of government intervention to limit the rise in cost of living,” it stated.