Domestic demand to rebound this year despite MCO - MIDF

KUALA LUMPUR: Domestic demand is expected to rebound this year despite some disruptions caused by the implementation of the Movement Control Order (MCO), MIDF Research said.

In a research note today, it noted that consumers have been more adaptive to the new normal by shifting their purchases online when there was a disruption to offline spending caused by restrictions in place to curb increasing COVID-19 cases in the country.

"The recovery in private consumption will be more evident from the second quarter of 2021 onwards as the National COVID-19 Immunisation Programme has kicked off and vaccination roll-out will continue by phases throughout the year, besides benefiting from last year's low base effect.

"Low overnight policy rate (OPR) and fiscal stimulus packages, including the latest PEMERKASA Plus economic stimulus package with people-centric measures such as i-Sinar, Bantuan Prihatin Rakyat (BPR), wage subsidy and loan moratorium will continue to provide support to the estimate," it said.

In particular, MIDF Research said the blanket withdrawal of i-Sinar could pave the way for unaffected or less affected contributors to increase their discretionary spending.

"Consumer inflation is expected to go up this year but remain benign and supportive to consumption.

"The services sector, in general, will also return to positive territory this year but some services involving hotel and aviation are likely to still be pressured by the interstate travel ban and international border closure," it added.

-- BERNAMA