Malaysia's GDP expected to grow by 5.3 pct in 2021 - ICAEW

According to the latest Economic Outlook report by global forecast and quantitative analysis firm, Oxford Economics, commissioned by ICAEW, it is anticipated that around 60 per cent of the Malaysian population will be fully vaccinated by the end of the year.

"This will allow more sustainable easing in restrictions and boost services and social spending.

"Like all other ASEAN countries, the report predicts that Malaysia will see more GDP growth in the second half (H2) of 2021 than the average pre-COVID-19 GDP growth from 2011 to 2019," ICAEW said in a statement today.

For Southeast Asia, the report predicted that GDP will rebound strongly to 4.8 per cent in 2021 after contracting 4.1 per cent in 2020.

The report stated that the rebound is expected to be due to an improvement in global trade activities, accommodative macro-policies, continued government fiscal support and low-interest rates across the region.

Growth is also forecast to improve to 6.5 per cent in 2022 as countries move closer to herd immunity and the recovery becomes more synchronised across sectors.

Southeast Asian economies will continue to experience varying speeds of recovery in 2021, driven by countries' abilities to contain fresh waves of COVID-19 infections and their success in vaccine procurement and distribution, said the report.

"Uncertainties remain as rates of recovery will depend on the progress of vaccine rollouts and whether the possibility of further lockdowns remains high in the near term.

"However, regional growth prospects for Southeast Asia in the medium to long-term remains optimistic," the report added.

Sequential GDP growth is expected to be weaker in the second quarter (Q2) than in Q1 across mosteconomies in the region, the report said, as tighter restrictions will hit already-fragile sectors which are negatively affected by social distancing measures or lowered household social spending.

Despite these headwinds, the report noted that accommodative macroeconomic policies and a surge in world trade mean that most of Southeast Asia would still record impressive GDP growth figures this year.

An easing of restrictions expected in June and July for most countries is likely to facilitate an economic improvement in the second half of this year.

Apart from the Philippines and Thailand, most Southeast Asian economies are expected to return to pre-COVID levels of growth this year, with Singapore and Malaysia set to see GDP growth in 2021 of between two per cent and 2.5 per cent above pre-COVID levels.

Recent lockdown restrictions in Singapore, Vietnam and Malaysia mean that household spending has reduced in Q2 2021.

"However, it is unlikely to dip significantly as households and businesses are better equipped with digitalisation to enable them to work and shop remotely.

"Governments have also used more targeted measures, compared with nationwide lockdowns which have minimised disruption," the report added.