Maybank Kim Eng Trims 2021 GDP Growth Forecast To 4.2 Per Cent

KUALA LUMPUR, June 15 (Bernama) -- Maybank Kim Eng Research has trimmed its Gross Domestic Product (GDP) growth forecast for 2021 to 4.2 per cent from 5.1 per cent previously due to the tighter restrictions last month and total lockdown this month. The research house said the downward revision was mainly due to lower growth for services and private expenditure as global economic recovery and the still-sizeable impulse left from Budget 2021 and economic stimulus packages supported manufacturing, external trade and public expenditure growth. Malaysia's GDP contracted 5.6 per cent last year compared to a 4.3 per cent growth in 2019. “We revised the budget deficit to GDP forecast to 6.8 per cent from 6.0 per cent previously (2020: 6.2 per cent) plus keep our ‘no OPR (Overnight Policy Rate) change’ view,” it said in a note Tuesday. Malaysia entered into another round of Movement Control Order (MCO 3.0 or referred as Malaysia’s cordon sanitaire implementation) as daily new COVID-19 cases continued to rise, forcing businesses to temporarily stop their operations. However, the food and beverage industry along with health services, water and energy utilities, transport -- including ports and airports -- were among the essential services sectors allowed to operate during MCO 3.0, which began on June 1 and has recently been extended till June 28. As of Monday (June 14), Malaysia recorded 4,949 new COVID-19 cases, bringing the total number of infections in the country since the pandemic began to 662,457 cases with 3,968 fatalities. Separately, CGS-CIMB Securities Sdn Bhd kept its GDP forecast at 4.4 per cent for 2021, incorporating three phases of lockdown. “We expect the impact from the extension of the phase 1 lockdown to be offset by greater leniency in sectors allowed to operate than our initial assumption and support from the government's People and Economic Strategic Empowerment Programme (PEMERKASA) Plus aid package,” it said. According to the stockbroking firm, if the first phase were successful, Malaysia would move on to the second phase lasting four weeks and allow the reopening of certain economic sectors that do not involve large gatherings and where physical distancing can be maintained. CGS-CIMB said after phase 2, it would move on to phase 3, when almost all economic activities could resume, although physical presence at the workplace would still be controlled. -- BERNAMA