Malaysia’s economy is set to recover in 2021, driven by domestic support, although headwinds in 2020 will continue to persist next year and weigh on growth expectation.

A view of Kuala Lumpur capital city of Malaysia (Photo: New Straits Times)

In its 2021 market outlook presentation on 3 December, MIDF Research said that the COVID-19 pandemic will remain as the biggest threat to economic recovery, followed by other issues such as rising protectionism, geopolitical tension, political instability and volatility in commodity prices.

The financial services provider, nevertheless, forecast that Malaysia’s economy will be able to grow by 7 percent year-on-year in 2021, which falls in between Bank Negara Malaysia and Ministry of Finance’s growth targets of 6.5 percent to 7.5 percent.

It added that domestic demand is expected to drive economic recovery as economic activities resume and sentiments improve, while private consumption and private investments are expected to rebound next year, expanding by 7 percent and 8.3 percent, respectively.

Based on September 2020’s data, retail sales, which is a proxy to consumption, has managed to record a marginal year-on-year growth of 1.1 percent after six consecutive months of contraction.

The research house also said that growth is to be observed in all economic sectors, while expansion is likely to take place starting from the services sector, which is the largest contributor to Malaysia’s economy, right to the construction sector, which has the lowest share of the nation’s total gross domestic product.

Source: VNA