6.0 pct GDP in 2022 achievable, but downside risks remain

KUALA LUMPUR: Malaysia’s growth projection for next year is achievable, however, downside risks such as the global economic recovery losing momentum still remain, given that the supply chain crisis is unlikely to ebb quickly.

“There is also the possibility of demand waning in response to the impact of the likely pullback in policy stimulus in many developed countries,” said Maslynnawati Ahmad, Bank Pembangunan Malaysia Bhd’s (BPMB) head of Economics and Research, Group Strategy.

Globally, the supply chain crisis saw manufacturers and distributors of goods unable to produce or supply at prepandemic levels due to various reasons, including worker shortages and the lack of key components and raw materials.

As for Malaysia, she said uncertainties over how fast businesses could meet the pentup demand – in terms of capacity and structural changes to cater to the new norms and customer preferences as well as new technologies – could affect the growth outlook.

Additionally, sentiment among businesses over fixed investment decisions could influence the projection, she said during Bernama TV’s programme, “The Brief”, aired on Tuesday.

In unveiling Budget 2022, the government projected a GDP growth of 5.5-6.5 per cent next year.

“If the growth projection was just based on cyclical and base factors, a 5.0-5.5 per cent real GDP growth can be achieved.

“However, a mid-range projection of 6.0 per cent can be achieved if the global economy continues to recover, with strong pent-up domestic demand driving business recovery next year,” she said.

Replying to a question by host Gerard Ratnam on the key drivers for the economy in 2022, she said that execution was key, mainly in getting the private sector to carry out most of the initiatives, particularly those pertaining to the aspiration of re-setting the economy, with a focus on strategic and highimpact industries.

“Businesses need to rebound close to – if not above – the prepandemic levels,” she said.

Maslynnawati said businesses need assistance in restoring capacity, perhaps through undertaking structural changes or transformation to fit into the new normal of business operations that were brought about or accelerated by the pandemic.

This includes climate change-related technological advancements and changes in consumer demand preferences.

She also said that development financial institutions such as BPMB, Bank Simpanan Nasional, SME Bank and Agrobank also played their role by offering various financing programmes to support businesses, in addition to Bank Negara Malaysia’s financing programme for small and medium enterprises.

Under Budget 2022, BPMB is offering various facilities, including a working capital scheme of up to RM500 million.

The Rehabilitation and Support through Equity (RESET) funds of up to RM500 million will also help businesses facing gearing or leverage problems.