KUALA LUMPUR: HSBC Group has revised its forecast on Malaysia's real gross domestic product (GDP) growth for 2021 to 5.7 per cent from the 6.7 per cent projected earlier this year.
HSBC chief economist for ASEAN market Joseph Incalcaterra said the downward revision had to do with the re-implementation of the Movement Control Order (MCO) by the government in January to control the third wave of the COVID-19 pandemic.
"The outbreak at the beginning of the year did have an impact on the rosy growth outlook. We had to trim the GDP forecast down a little bit to 5.7 per cent this year which is slightly below the government's projection," he said during a virtual media briefing on HSBC ASEAN Outlook 2021 today.
However, Joseph is still upbeat on the country's economic recovery outlook this year, underpinned by strong export data, foreign direct investment commitments and vaccination strategy.
"I think the key focus is the momentum of growth rebound in the second quarter (2Q) given that the MCOs have ended so we should see a strong momentum for the quarter.
"What the investors will focus on is the high likelihood of an election, it's always something to be on the backdrop of investors, and particularly bond investors will be focusing on the fiscal consolidation trajectory in the future government would increase the revenue base and restore the debt GDP trend back to 55 per cent," he added.
The International Monetary Fund (IMF) recently projected Malaysia’s growth to rebound to 6.5 per cent in 2021, driven by strong recovery in the manufacturing and construction sectors, and the impact of the vaccination rollout in February.
IMF also expects the country’s unemployment rate to drop to 3.8 per cent this year before going further down to 3.6 per cent in 2022, as compared to 4.5 per cent in 2020. - Bernama