KUALA LUMPUR: Malaysia’s financial system is predicted to strengthen this 12 months because the nation transitions to the endemic phase, beginning with the reopening of worldwide borders.
Gross home product (GDP) progress is projected to be round 6% (2021: 3.1%) for the 12 months, and the first-quarter GDP is probably going to report a progress of 5% to 6% (2021: minus 0.5%).
Sunway University professor of economics Dr Yeah Kim Leng stated the expansion momentum could be supported by stronger non-public consumption and investments amid the constructive sentiment and general outlook.
“The resource-based and commodity sectors, particularly palm oil, rubber and oil and gas (O&G) are expected to thrive on the back of high prices,” he informed Bernama.
The electrical and electronics sector would additionally proceed to profit from sturdy export demand as the worldwide electronics provide stays constrained, whereas the providers sector (together with the import and export of providers) can also be anticipated to see stronger demand with the reopening of the financial system.
Yeah stated the nation’s transition into the endemic phase would have a constructive spillover impact on numerous industries.
“The aviation, hospitality and tourism-related industries are expected to emerge from their two-year doldrums and chart better performance as firms rebuild their balance sheets,” he stated, including that it could even be a shot within the arm for the retail sector.
Additionally, the lifting of border restrictions would additionally facilitate cross-border enterprise actions, commerce and investment-related providers, in addition to mergers and acquisitions.
Meanwhile, Yeah stated though Malaysia shouldn’t be instantly impacted by the Russia-Ukraine battle, the disruptions to world power and commodity markets, coupled with greater danger aversion would have blended short-term results on the nation’s inflation, export earnings and monetary markets.
He famous that the second-round damaging results on world progress would dampen the exterior outlook for Malaysia’s extremely open financial system.
“Both the commodity and financial markets will see increased volatility although the higher commodity prices – including O&G –will be positive for Malaysia’s export earnings and further widen its current account surplus.
“While short-term foreign portfolio inflows may increase due to diversification of geopolitical risk in favour of the Malaysian markets, the market swings are likely to be elevated since geopolitical, growth and policy risks abound in the current environment,” he stated.
Moving ahead, the nation’s sturdy financial outlook may also assist to boost the ringgit, which is projected to strengthen to 4.10 in opposition to the US greenback from 4.17 final 12 months regardless of heightened uncertainty, in accordance to Kenanga Research.