KUALA LUMPUR, April 1 ― MIDF Research is maintaining its forecast of Malaysia’s gross domestic product (GDP) growth at 6.0 per cent for 2022 as the country begins its transition to the Covid-19 endemic phase today.

In its Malaysia Equity Research note, titled "Reopening, Reflation and Readjustment”, the research house said the reopening of Malaysia’s international borders is one of the significant growth catalysts for the second quarter and beyond.

"The reopening of international borders and the lifting of remaining requirements or restrictions would accelerate economic recovery and this will eventually be reflected in the better performance of the equity market,” it said.

Meanwhile, the research firm foresees the ringgit to appreciate towards RM4.09 by end-2022, supported by sustained current account surplus and the expected inflows of funds into the country.

On commodities, MIDF Research anticipates the prices to remain elevated in the second quarter of 2022 (Q2 2022) as the share price performance of commodities-linked companies has begun to match the rise.

As for the upcoming 15th general election, the research firm believes that market investors are now more concerned about stability post-election, and less about pre-election goodies and promises.

It noted that Covid-19 remains a risk to Malaysia’s growth outlook as new variants could drive infections higher and increase pressure on the healthcare system, while high inflation could limit spending as prices of goods have been increasing, driven by both supply constraints and growing demand.

"The rise in commodity prices will further push inflation higher and limit the ability to spend on non-energy and non-food products and services.

"Another risk to the growth outlook could come from slower improvement in the supply situation,” it said.

MIDF Research noted that the recent war in Ukraine had caused global commodity prices to increase due to concerns over disruption in the global supply.

"While the rise in prices will be positive for the outlook of the commodity-production nations, we opine that the rise in commodity prices will push the inflation outlook higher for many countries, particularly because of higher energy and food prices.

"Based on our in-house view, prices of Brent crude oil and crude palm oil will average higher this year at US$110 per barrel and RM4,300 per tonne, respectively,” it said.

Overall, MIDF Research has maintained its ‘positive’ call on the automotive, banking, consumer, healthcare, oil and gas, plantations, technology and media sectors, and retained its ‘neutral’ call on the gloves, power, property, telecommunication and transportation (aviation, ports and logistics) sectors.

It has also upgraded its call on the construction and real estate investment trust sectors to ‘positive’ from ‘neutral’. ― Bernama