KUALA LUMPUR: Malaysia’s real gross domestic product (GDP) is expected to return to pre-pandemic level by the first quarter (Q1) of 2022, Moody’s Analytics said.
Moody’s Analytics chief economist for Asia Pacific Dr Steve Cochrane said the the global economic recovery would contribute to the strong economic recovery of Malaysia, being an open economy and a trading country.
He said the implementation of vaccine programmes around the world and at the domestic level would also help stimulate domestic growth and demand.
“Malaysia and Singapore are open economies, which will return (recover) as soon as the global (economic) recovery,” he said at global economic outlook virtual briefing today.
On the implementation of economic stimulus packages in Asia Pacific, Cochrane said Malaysia, Singapore, Japan and Australia were among the countries in the Asia Pacific region that were very active in implementing stimulus packages last year to support their respective economic growth.
Moody’s Analytics expects the implementation of economic stimulus packages to continue in Malaysia, Singapore and Japan by 2021 to support growth and help the affected sectors.
However, he said the size of the stimulus package was expected to be relatively smaller than the previously announced amount in line with the gradual recovery in economic activity.
“Implementation (stimulus package) will be more targeted by focusing on truly affected sectors including small and medium enterprises,” he said.
Previously, Moody’s Analytics said Malaysia and Singapore were positioned to gain from global growth in 2022.
It said both countries had been cautious in opening their borders to travellers despite being among the most aggressive with fiscal policy support for their economies over the past year.
The ratings agency said China and its linkages through supply chains in Asia Pacific and the rest of the world could help Asia lead the economic recovery, much as it did following the global financial crisis of 2008-2009.
It noted that the focus on getting the production side of the economy back on track effectively allowed manufacturing to spark Chinaʼs recovery beginning in the second quarter of 2020, and lifted surrounding Asian economies in the quarter, as they eased up on many movement restrictions.
“Countries, including Vietnam, Malaysia, Taiwan and Indonesia, have benefitted from the carry condition of Chinaʼs growing trade demand,” it said.
Moody’s Analytics said while Chinaʼs recovery momentum boosted trade across Asia Pacific, the sustainability of regional export flows remained contingent on the collective effort to control the Covid-19 pandemic.
“Indonesia, the Philippines and Malaysia continue to struggle and may require more fiscal support, since they also run risks of additional quarantines or movement controls in coming months,” said Moody’s Analytics.
Aside from trade linkages, vaccination rates will further differentiate patterns of economic growth in 2020 but remains difficult to monitor in Asia, because there are little data available from consolidated sources.- The Star