KUALA LUMPUR, Jan 4 — After two years of fighting the Covid-19 pandemic, the Malaysian economy is coming out of its economic trough in 3Q 2021 and is on the path to recovery in 2022, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said.
Lee said this is supported by the reopening of economic and social sectors. The worst floods in decades in some states have tempered the recovery in late December 2021 and early 2022.
“We estimate real gross domestic product (GDP) to grow by 5.2 per cent in 2022, an improvement from estimated 3.4 per cent in 2021,” he said today.
“A sustained revival of consumer spending, aided by a gradual recovery in the labour market (jobless rate at 4.3 per cent in October 2021 versus 5.3 per cent in May 2020) and the anticipated strong bounce back in public investment via high allocation of development expenditure (RM75.6 billion) in 2022 will underpin a firmer economic recovery.
“However, we caution that rising cost of building materials and weak public implementation capacity as well as the shortage of workers could delay the implementation of projects, resulting in slow disbursement of funds,” he said.
According to Lee, SERC found that since the economic reopening, general mood and sentiment are positive as consumers were allowed interstate travels, and aided domestic tourism.
“People mobility and traffic indicators have been showing signs of revival amid wary about the Omicron Covid-19 virus variant.
“Retail, recreation, grocery, and shopping malls as well as workplace visits moved higher.
“Hotel occupancy rates have improved to around 40 to 50 per cent in recent months, thanks to a resumption of interstate travels and local tourists,” said Lee.
Lee also noted that the revival of international tourist arrivals (an average of 26.1 million per year in 2015 to 2019 and generated foreign exchange earnings of RM80.7 billion per year in the same period) is deemed necessary to sustain firmer tourism and related services.
“Businesses are slowly returning back to normality as business owners are eager to restart and resume back to the pre-Coivid-19 pandemic state.
“The manufacturing sector will continue its growing momentum amid facing constraints from the supply chain disruptions and workers shortage.
“Output of agriculture sector will be supported by production of palm oil, and rubber as well as fisheries amid the shortage of workers and increased cost of fertilisers and animal feed as well as the impact of climate change,” he said.
In addition, the ongoing public infrastructure projects as well as the implementation of new projects and approved manufacturing projects will help to turnaround the construction sector from a slump in 2020 to 2021, he said.
However, SERC found that the mining and quarrying sector is expected to remain weak on lower crude oil and condensates production, following the scheduled shut down of oil and gas plants and facilities for maintenance.
“We expect exports to normalise to estimated 1.8 per cent in 2022 (estimated 24.5 per cent in 2021) as growth will moderate from a high base level averaging RM102.0 billion per month in 2021.
“There remains lingering uncertainty over global growth due to the Omicron variant, global supply chain disruptions are also likely to persist into the first half of 2022, due to the time for bottlenecks to ease and production capacity to ramp up.
“The shortage of workers and increased cost of raw materials also dampened the pace of production,” said Lee.
