SERC maintains 2021’s GDP growth at 4%, subject to risk

by NUR HANANI AZMAN/ pic by BLOOMBERG

The Socio-Economic Research Centre (SERC)  maintains Malaysia’s Gross Domestic Product (GDP) growth estimate of 4% for this year is under threat depending on the future path of virus containment.

SERC executive director Lee Heng Guie said it also depends on the pace of vaccination rate as well as how long it takes moving to Phase 2, 3 and 4 of the National Recovery Plan for the reopening of more economic and social sectors.

“We expect continued recovery in the fourth quarter of 2021 as a restoration of consumer spending will be supported by the progress of vaccination, and the containment of virus spread.

“Amid some pent-up demand, the continued cash aid and loan moratorium help to provide a temporary cash flow relief but a weak recovery in the labour market remains a drag on consumer spending. Lingering political uncertainty remains a drag on investors’ confidence,” he said in SERC online media briefing on Malaysia’s quarterly economy tracker (April – June 2021) today.

The worsening pandemic condition and persistent movement restrictions have had a long-lasting impact on businesses and also dented the already impaired balance sheets of the underserved as well as vulnerable, low and middle-income households.

“The lockdown in June has punctuated the low-base effect aided annual comparison in the second quarter of 2021.

“July and August are important months to watch as the high level of vaccination rates will offer a glimpse of hope for a fast transition into Phases 3 and 4, allowing more economic sectors in the positive list and also social sectors to start operations accordingly,” he added.