RHBIB upgrades M’sia's GDP growth forecast to 7%

KUALA LUMPUR: RHB Investment Bank Bhd (RHBIB) has upgraded its 2021 real gross domestic product (GDP) growth projection for Malaysia to seven per cent year-on-year (y-o-y) from four per cent y-o-y earlier.

The revision in outlook was made a er factoring in the assumption of mass Covid19 vaccine deployment in the second half of next year, the investment bank said.

"Having said that, the vaccine itself is likely to cause gradual economic improvements as issues over efficacy and accessibility would be at the fore of public health policy next year," it said in a research note yesterday.

Apart from the vaccine development, another catalyst for next year came from the continued government support, especially towards the earlier part of 2021, RHBIB said.

"The government’s 2021 Budget is likely to remain large, to accommodate the ongoing restrictions, until a vaccine is widely available, and this would be aided by the already-low interest rate environment," it said.

It said more targeted supports were anticipated to come from the government next year, following multiple support measures under the Prihatin Supplementary Initiative Package (Kita Prihatin) that were announced recently, including cash handouts to be paid in October 2020 and January 2021.

"Next year, we expect support will be more targeted, aimed at segments of the economy that are still suffering from the restrictive measures’ effects such as tourism and small and medium enterprises (SMEs).

"There is also a possibility that the government’s social assistance for the low income group (B40) will be expanded, in line with the revision of the poverty line income from RM980 to RM2,208 to benefit a larger portion of the population," it said.