New Straits Times

‘Malaysia’s economy set to grow 6pc next year’

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KUALA LUMPUR: Malaysia’s economy is expected to post a six per cent growth next year from a three to four per cent expansion this year, said MIDF Research.

The research firm also expects Bank Negara Malaysia to raise the Overnight Policy Rate (OPR) by 25 basis points in the second half of next year.

It said the recovery in domestic economic activities would likely continue with both consumers and businesses boosting their spending in view of the better outlook.

Government spending will also contribute positively to growth, given the expansiona­ry 2022 Budget and record high allocation for developmen­t expenditur­e.

“In addition, the growth in external demand will further support Malaysia’s foreign trade activity. Overall, we forecast Malaysia’s economy to grow 3.7 per cent this year and six per cent next year.

“Meanwhile, the ringgit is expected to appreciate to 4.09 against the US dollar by the end of next year. Inflation is anticipate­d to be at 2.1 per cent yearon-year.”

Neverthele­ss, there are downside risks that may disrupt the growth outlook for next year.

“While the expected recovery this year will be delayed due to a resurgence of Covid-19 cases, the situation faced this year has been very much different from the one faced last year.

“One key difference is the availabili­ty of the Covid-19 vaccine. The country’s high vaccinatio­n rate has allowed the government to reopen the economy.”

MIDF Research said issues that might have negative impacts on growth next year included the Omicron Covid-19 variant, incessant inflationa­ry pressure, pullback in China’s property market and a possible general election.

“In our base case scenario, these issues will lead to some disruption in the pace of economic recovery, although they are unlikely to derail the process.

Malaysia’s economy returned to negative growth in the third quarter with real gross domestic product declining 4.5 per cent.

 ?? BLOOMBERG PIC ?? MIDF Research says Bank Negara Malaysia is likely to raise the Overnight Policy Rate by 25 basis points in the second half of next year.
BLOOMBERG PIC MIDF Research says Bank Negara Malaysia is likely to raise the Overnight Policy Rate by 25 basis points in the second half of next year.

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