The Malaysian economy is projected to recover this year with growth of around 5.2% to 5.9%, according to AmBank Research today.
In a research note, the firm said the growth was driven by increased Gross Domestic Product (GDP) and global trade, stimulus assistance measures, efforts to curb the spread of Covid-19 as well as the implementation of vaccination measures.
Total investment is also projected to increase with the same prospects being experienced by key sectors in the economy, he said.
"Therefore, the increase in capital expenditure is expected to occur this year. However, growth for 2021 will be affected by the increase in Covid-19 cases as well as the implementation of movement control measures in January, "he said as reported by Bernama.
According to AmBank Research, the impact that can be seen in the first quarter of this year, however, is less significant than the effect of the implementation of movement control in April last year.
"However, we are still worried about the micro, small and medium business situation. For that reason, the full year GDP of 2021 is expected to be around 5.2% to 5.9%, ”he said.
AmBank Research said that, as expected, GDP declined in the fourth quarter of 2020, lower performance in the previous quarter due to increased Covid-19 cases and control measures to curb its spread.
The fourth quarter GDP contraction of 2020 at 3.4% year-on-year was indeed in the research firm's expectations of around -3.2% and -3.5% following the revision of -2.6% year-on-year for the third quarter of 2020.
"Following negative growth for the three consecutive quarters with the largest (figures) in the second quarter of 2020 at -17.1% year-on-year, GDP for the full year declined 5.6% which is an increase from our projection at -5.5%," he said.
This is the largest contraction ever recorded compared to -7.4% during the Asian financial crisis in 1998.
In addition, the nominal decline in GDP by 6.3% was also due to the impact of deflation.
