KUALA LUMPUR, Jan 4 – After two years of battling the Covid-19 pandemic, Malaysia’s economy is emerging from its economic trough in Q3 2021 and is on course for recovery in 2022, executive director of the Center for Socio -economic (SERC) said Lee Heng Guie.
Lee said this is supported by the reopening of economic and social sectors. The worst flooding in decades in some states dampened the recovery in late December 2021 and early 2022.
“We estimate that real gross domestic product (GDP) will grow by 5.2% in 2022, an improvement from the 3.4% estimated in 2021,” he said today.
“A sustained recovery in consumer spending, helped by a gradual recovery in the labor market (unemployment rate at 4.3% in October 2021 compared to 5.3% in May 2020) and the expected strong rebound in public investment via a strong allocation of development spending (RM75.6 billion) in 2022 will support a firmer economic recovery.
“However, we warn that the rising cost of construction 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. he declares.
According to Lee, the SERC has found that since the economic reopening, the general mood and sentiment is positive as consumers have been allowed to travel between states and have helped domestic tourism.
“People mobility and traffic indicators have shown signs of recovery amid distrust of the Omicron virus variant Covid-19.
“Retail, recreation, grocery stores and malls as well as workplace visits have increased.
“Hotel occupancy rates have improved to around 40-50% in recent months, driven by a pickup in interstate travel and local tourists,” Lee said.
Lee also noted that the revival of international tourist arrivals (an average of 26.1 million per year from 2015 to 2019 and foreign exchange earnings generated of RM80.7 billion per year during the same period) is judged necessary to support firmer tourism and related services.
“Businesses are slowly getting back to normal as business owners are eager to restart and return to the pre-Covid-19 pandemic state.
“The manufacturing sector will continue to grow despite constraints from supply chain disruptions and labor shortages.
“The production of the agricultural sector will be supported by the production of palm oil and rubber as well as fishing amid the shortage of workers and the increase in the cost of fertilizers and animal feed as well as the impact of climate change,” he said.
In addition, ongoing public infrastructure projects along with the implementation of new projects and approved manufacturing projects will help lift the construction sector from a slump in 2020 to 2021, he said. .
However, the SERC found that the mining and quarrying sector is expected to remain weak due to lower crude oil and condensate production, following the planned closure of oil and gas plants and maintenance facilities.
“We expect exports to normalize to around 1.8% in 2022 (estimated at 24.5% in 2021) as growth slows from a high base averaging RM102.0 billion per year. months in 2021.
“There remains lingering uncertainty over global growth due to the Omicron variant, global supply chain disruptions are also expected to persist in the first half of 2022, due to the time needed for bottlenecks to resolve and production capacity is accelerating.
“The shortage of workers and the rising cost of raw materials have also slowed down the pace of production,” Lee said.