KUALA LUMPUR: HSBC Group has projected Malaysia's gross domestic product (GDP) growth for 2021 at 4.1 per cent compared with an estimated 6.7 per cent earlier this year.
Its Asian economics research co-head Frederic Neumann said the recent challenges posed by the Covid-19 pandemic was restraining domestic demand growth for Malaysia.
However, Neumann highlighted that the effect was actually a temporary drag, and HSBC has a forecast of 5.4 per cent growth for Malaysia's GDP in 2022.
"This is because we believe that Malaysia is actually uniquely placed in many regards to bounce back from the Covid-19 pandemic and place itself out," he said during the HSBC Asian Outlook 2021 virtual webinar today.
In terms of supply chain, Neumann said Malaysia had received enormous amounts of foreign direct investment (FDI), having a unique position in terms of capturing increased supply chain relocating to Southeast Asia.
"Thus, we look at Malaysia being a stuffles story in terms of its capturing export market share on manufacturing and we believe that will come to play more and more as the domestic trade from the current movement control order (MCO) is fading. It may be a few months yet," he said.
Neumann said the other thing to point out about Malaysia was its vaccine delivery schedule.
He said the vaccination rate for Malaysia was actually a bit ahead of its other peers thus, the firm believed that the country would hit imminuty herd by early next year.
Meanwhile, EM Rates Research head of global research Andre de Silva has taken a bit more cautious thought on Malaysia as the implication of extended lockdown in the country might adversely affect its fiscal and particular bond issuance.
"Malaysia already had a second round of fiscal stimulus.On top of that, additional extension lockdown could cause further fiscal slip as a consequence.
"There is also consent about credit rating. While it's not that significant losing (single A stage to triple B), the margin does have some bearing in particular by a sensor account like in Japan," he said.