KUALA LUMPUR, May 4 — Malaysia is poised for a strong rebound in 2021 and 2022 as it rides a vaccine-led global economic recovery once the Covid-19 pandemic situation remained under control, the Asean+3 Macroeconomic Research Office (AMRO) said in its annual consultation report on Malaysia here today.

The regional macroeconomic surveillance organisation said the country’s gross domestic product (GDP) growth was expected to rebound from -5.6 per cent in 2020 to 5.6 per cent in 2021 and 6.2 per cent in 2022 after taking into consideration existing movement restriction measures imposed by the government.

"I think if we compare Malaysia’s recovery, it is relatively strong compared to other (emerging market) economies. 

"As I mentioned earlier there were some setbacks along the way. We were expecting a stronger recovery this year at the beginning but because of a new wave of infections towards the end of the year they had to tighten social restrictions and that obviously dampened growth rate.

"But nevertheless I think most policy makers have learned and new restrictions are much more targeted and because of that it has allowed the economy to grow and recover although at a much slower pace than before.

"So I think ramping up vaccination in Malaysia and the further opening up of the economy, Malaysia will benefit more and domestic demand will trick in and provide serious support for the economy. 

"On balance, I would say Malaysia has done relatively well in terms of recovery and also in terms of containing the infection,” AMRO chief economist Khor Hoe Ee said in a virtual media briefing on the report’s publication here.

Earlier AMRO economist Diana del Rosario said Malaysia’s external sectors such as merchandise exports of rubber, palm oil and electronic parts were able to benefit from the uneven impact of the global Covid-19 pandemic on global trade. 

"And the hope is that this global recovery would lead to a stronger and broader pickup in Malaysia’s exports,” she said.

According to the aforementioned report published, it said the ongoing roll-out of Covid-19 vaccinations in the advanced economies and the gradual improvement in mobility that may follow, bode well for a broader pick-up in Malaysia’s merchandise exports. 

"Domestic demand could likewise bounce back in Second Quarter(Q2) 2021 as the current wave of local infections is brought under control, similar to the case in Third Quarter (Q3) 2020 after the nationwide lockdown was lifted. 

"Meanwhile, international travel and tourism activities are only expected to start gaining traction in 2022 as Covid-19 vaccines become more widely available,” it said.

The report added that the speedy recovery would be underpinned by Malaysia’s ample domestic savings, diversified economy, and resilient banking system, and supported by calibrated stimulus policy. 

Yet, it also highlighted the damage caused by the pandemic to the balance sheets of households, businesses and the labour market which suggested that the economy may not return to its pre-pandemic growth path in the short term.

However, the report added that Malaysia’s economic outlook remained subjected to the uncertain developments of the pandemic. 

"A prolonged resurgence of Covid-19 infections and delays in the pace of vaccinations, in Malaysia and the major economies, cast a cloud over the growth outlook.

"In a tail risk scenario, a protracted decline in economic activity would imperil the soundness of

the financial system, and lead to renewed market distress,” it said in its executive summary.

A full copy of the aforementioned report can be accessed at AMRO’s official website.