Standard Chartered expects Malaysia’s GDP is expected to recover to 6.2% from 3.5 % in 2021 adding that the successful vaccination programme is likely to facilitate to trend growth.
In a global research briefing, it said that the global reopening should sustain external demand and domestic demand would pick up on better job prospects and wage outlook.
On investment activity, Standard Chartered said that the Investment activity is set to rise with improved clarity on domestic economic reopening and strong FDI
The bank said that the key downside risks to growth include the pandemic and faster-than-expected monetary tightening Monetary policy
It said that it expects Bank Negara Malaysia (BNM) to refrain from tightening in H1; normalisation may start in H2 as output gap closes “
On underlying inflation, Standard Chartered said that it is to remain benign amid slack in the economy and labour market forecasting core inflation at 1.4% in 2022..
On key risks, the bank cited persistent supply chain disruptions and higher energy prices. It said that Budget 2022 budget remains expansionary, with spending (excluding COVID funds) projected to increase 10%
It said that it sees revenue upside from the better collection as growth recovers in 2022, as well as one-off revenue from windfall tax. “ Development expenditure is projected to increase 22% to align with the 12th Malaysia Plan,” it said