No more lockdown and re-opening of international borders may lead to faster economic growth in 2022, say analysts

Amir H. Muhd
15 Feb 2022 12:58am
Illustrative purpose only (Source: 123rf)
Illustrative purpose only (Source: 123rf)
KUALA LUMPUR: Malaysia’s economic growth momentum may strengthen further in 2022, thanks to the possibility of no lockdown and re-opening of international borders, said analysts.

The country registered 3.1 per cent growth in its Gross Domestic Product for 2021.

“We expect the 2022 economic outlook will be relatively better because the recovery last year had been weighed down particularly by the spread of Delta variant and imposition of full lockdown.

"Going forward, domestic spending is expected to increase, benefiting from greater mobility following the reopening of the economy and backed by improvement in the job market. Businesses will also expand production in anticipation of growing demand,” MIDF Research said.

“While the ongoing Covid-19 pandemic remains a downside risk, we opine the government will not reintroduce tight lockdown despite the recent Omicron-led resurgence in Covid-19 infections.

"This is because measures like vaccination and enforcement of existing SOPs will continue to safeguard and improve public health,” it added.

Malaysia's economic growth advanced by 3.6 per cent in the fourth quarter of last year, following a contraction of -4.5 per cent YoY the prior quarter.

The growth was however slower than MIDF Research’s expectation of 5.6 per cent but surpassed the market consensus of 3.3 per cent.

The robust expansion was attributed to the recovery in domestic consumption and business activities amid the relaxation of the stringent restrictions, including the resumption of interstate travels, the firm said.
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Meanwhile, Public Investment Bank said Malaysia’s economy is expected to grow faster than 2021 on the back of the full economic reopening in the country.

The firm added that the bold decision to fully reopen international borders by the government is expected to boost the growth further, particularly reviving the country’s tourism sector.

Both MIDF Research and Public Investment Bank expect Malaysia to register six per cent or more in economic growth for 2022.

The increased vaccine administration is key to economic growth as it will restore consumer confidence as well as refrain the authorities from re-imposing lockdown measures that would hinder economic and social activities, they said.

However, they warned that there are certain factors such as the new highly transmissible Omicron variant, the rising cost of living, prolonged supply bottlenecks, the expiry of policy supports, and the possibility for new variants, among others, which could weigh down on the near-term growth outlook.