EXPERTS: HIGH SINGLE-DIGIT GROWTH LIKELY
But sustainable recovery will depend on the pace of reopening of economy
MALAYSIA’S economy is expected to post at least high single-digit growth in the second quarter but economists warn that the momentum has been dented by a surge in Covid-19 cases.
They said the expected strong GDP growth would be due to the low base after the economy plunged 17.1 per cent in the same period last year.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said Malaysia’s GDP performance could mirror that of Singapore’s.
Singapore’s economy expanded 14.3 per cent year-on-year — its fastest annual pace in 11 years — in the second quarter despite new Covid-19 outbreaks, said its Trade and Industry Ministry.
But compared with the previous quarter, it contracted 2.0 per cent, the ministry added.
“In reality, Malaysia’s economy was on recovery path but that was dented by the prevalence of the Covid-19 Delta variant.
“Therefore, we should not be overly joyous at the expected sharp rise in the second quarter GDP growth,” said Afzanizam.
The underlying strength of the economy had remained weak, as reflected by the elevated jobless rate, he added.
“More importantly, a sustainable
economic recovery will be heavily reliant on the pace of its reopening. This, in turn, hinges upon on how soon a country could reach herd immunity,” Afzanizam added.
Sunway University economic professor Dr Yeah Kim Leng said while a double-digit GDP growth in the second quarter was possible, the likelihood had been dampened by the resurgence in Covid-19 cases and nationwide lockdown since June 1.
“The positive growth will likely be driven by external demand, led by an improving global economy.
Domestic demand, particularly private consumption and private investment, will continue to be weighed down by the lockdown.
“The positive effects of the ramp-up in vaccination rollout on the economy will only be felt in the second half of the year, based on the assumption that the more infectious Covid-19 variants will be sufficiently contained to allow for a gradual reopening of all economic sectors,” Yeah added.
Putra Business School Assoc Prof Dr Ahmed Razman Abdul
Latif said he expected Malaysia to post a three to four per cent GDP growth in the second quarter.
“I do not think Malaysia will achieve a double-digit growth like Singapore as the republic did not experience spikes in daily cases as in Malaysia, which forced the closing down of some economic sectors and restricted movement between states.
“If we were to remain in Phase One of the National Recovery Plan over the next couple of months, the third quarter GDP growth will likely stagnate as well,” he added.