KUALA LUMPUR, Aug 28 — RAM Rating Services Bhd (RAM Ratings) has maintained its 2021 forecast for Malaysia’s gross domestic product (GDP) at 3.8 percent.
The credit rating agency, in its latest Economic Update 2021 report stated that the ramped-up vaccination rate in the country is expected to facilitate the reopening of most economic sectors in the fourth quarter, providing a healthy lift to economic growth.
“For 2022, we have penciled in a growth forecast of between 7.0 and 8.0 percent. Although this is primarily aided by low base effects, the reopening of most sectors of the economy and gradual utilization of domestic spare capacity should boost underlying growth”.
It also noted the continued recovery in global demand, particularly excess demand for semiconductors, will also buoy Malaysia’s performance next year.
RAM Ratings noted that overall output for 2022 is expected to recover above the level seen in 2019, estimated to be about 4.8-5.8 percent higher.
“Economic conditions are, however, unlikely to fully normalize until after 2022, as the severity of the impact on the economy has resulted in a negative output gap in the short term.
“We estimate that the economy, in aggregate, would operate 5.0 percent below its potential output in 2022,” it said.
This translates into about RM75 billion to RM85 billion less in output than could have been achieved without the fallout from the pandemic, it added.
The credit rating agency said the pace of vaccinations remains a key driver of domestic recovery, as is the continued recovery of the global economy.
“Exports are still the bright spot in the Malaysian economy, for which we project a strong rebound (2021: 11.1 percent; 2022: 4.6 percent) amid the semiconductor supercycle,” it said.