With Phase 3 in motion and the opening of borders in full gear, analysts say this is a positive outlook for tourism and the transportation sector.
At the onset, the country’s full-year GDP is expected to expand 4.0% in 2021 and 5.5% in 2022 reports Julia Goh, Senior Economist from UOB Bank.
The interstate travel ban, lifted on October 11, applies to nationwide ease as announced by Prime Minister Ismail Sabri yesterday during a Press Conference at the Perdana Putra Building.
Malaysians have mixed feelings about the announcement as some believe interstate travels applied on a nationwide scale will invite the rise of the new clusters, while some look at it as the revival of tourism and business industries.
Economic sectors are now allowed to operate with capacity levels corresponding to vaccination rates of employees with the objective of encouraging all employees to be vaccinated. Social activities are also gradually resuming. This should support a pick-up in economic momentum by 4Q and 2022.
After a strong double-digit growth of 16.1% year on year in 2Q, GDP is expected to revert down again in 3Q amid renewed lockdown measures in Jun-Aug due to elevated new infections. Key economic regions in the country were placed under a stricter restriction order in July which allowed only essential sectors to operate with a 60% limit on operating capacity.
As vaccinations progress towards 100% of the adult population and the government prepares to transition into an endemic phase, more sectors are expected to reopen under new COVID-19 norms.
Domestic political risks have abated with a new Prime Minister appointed on August 20, following the resignation of the previous PM and cabinet.
A Memorandum of Understanding (MOU) on bipartisan cooperation was signed between the government and Pakatan Harapan (PH) opposition leaders that pave the way for bipartisan agreement on political stability, key reforms, and the upcoming budget that will be tabled on 29 Oct.
It was agreed that parliament would not be dissolved and elections will be held before July 31, 2022.
