KUALA LUMPUR: Malaysian Rating Corporation Bhd (MARC) has revised its gross domestic product (GDP) growth estimate for 2021 lower to 3.3 per cent from 3.9 per cent previously.
MARC also estimated Malaysia's headline inflation and unemployment rate at 2.4 per cent and 4.6 per cent on average in 2021.
In a statement today, the rating agency said this followed the lower than expected third quarter (Q3) GDP performance which contracted 4.5 per cent year-on-year (Y-o-Y) after the double-digit growth of 16.1 per cent in Q2.
MARC said on a quarter-on-quarter (Q-o-Q) seasonally adjusted basis, the economy was undergoing a W-shaped recovery.
But it expects that the trough will be over by end-2021.
Overall, MARC said as of the first three quarters of 2021, the economy grew 3.0 per cent compared to the drop of 6.4 per cent during the first three quarters of 2020.
MARC said with the gradual resumption of economic activity underway in tandem with the rapid vaccination progress, a rebound can be expected in Q4 2021.
"A revival in consumer confidence amid pent-up demand would translate into stronger private spending.
"The Malaysian Institute of Economic Research's Consumer Sentiment Index reading in Q3 2021, which has surpassed the 100-point threshold for the first time since Q3 2018 on higher job confidence, supports such optimism.
"The labour market is improving at a moderate pace, as evidenced by the easing of unemployment and a higher labour force participation rate," it added.
MARC said the outlook in Q4 2021 and beyond, however, remained subject to uncertainties surrounding crisis response.
As far as pharmaceutical intervention measures are concerned, MARC said the government would tilt its policy response from being aimed at addressing vaccine hesitancy towards booster shot hesitancy among the rakyat.
"This will, in other words, shift the spotlight away from those still unvaccinated (November 14, 2021: 21.6 per cent).
"The government may be assertive in its booster shot campaign in the coming months following the procurement of vaccines via the National Trust Fund to RM6 billion.
"Such a scenario may influence Malaysia's growth trajectory in the months ahead, delaying the green shoots of recovery," it added.