‘Strong recovery in third quarter’

the first half of 2021.

“Our engine of growth is expected to recover more strongly in the third quarter before accelerating further in the fourth quarter, barring unforeseen circumstances like a new outbreak of new cases that could lead to periods of closure, persistent weakness in the labour market and weaker-than-expected recovery in global growth,” the research house said, as it expected the OPR to remain status quo until year-end.

Conversely, Dass opined that the door for further monetary easing remains open, noting that there is ample room for Bank Negara to reduce the policy rate.

Dass’ view is that the second quarter of 2020 will report the worst performance, in view of the movement control order (MCO) in Malaysia and lockdowns in other countries in a move to contain the spread of the pandemic virus.

“The outlook for the second half of the year remains challenging, despite the easing of lockdowns and the MCO. With political noises and trade war still very much in the cards, uncertainties remain. The risk of a second wave of virus infections cannot be ruled out.

“Also, it remains unclear if Covid-19 will be contained or will there be another round of lockdown. The focus will also be on Oct 1 when the six-month moratorium on loan repayment ends.

“Will there be an extension or will it be a targeted measure?” he said.

Dass also expected the base case for 2020 GDP to contract around 2%, with the downside at 5%, as monetary policy continues to play an important role, supported by fiscal and financial measures.