PETALING JAYA: Political changes from the appointment of Datuk Seri Ismail Sabri as Malaysia’s Prime Minister is not expected to derail current economic policies, recovery plans, and vaccination progress, according to UOB Research.
It noted that the newly minted prime minister will face his next hurdle or the tabling of a motion of confidence when Parliament reconvenes on Sept 6.
Meanwhile, the vaccination efforts have seen 12.7 million or 54% of Malaysia’s adult population successfully received two doses of the Covid-19 vaccine, while 18.1 million or 77% have received one dose, as of Aug 21.
UOB pointed out that a vaccination timeline disclosed in July guided almost all states are expected to have 40% of the adult population fully vaccinated by end-August, and the Covid-19 vaccination program will be accelerated further to achieve the target of 100% of Malaysian adults fully inoculated by October.
“Going by this assumption, we expect most economic and social sectors to reopen by Q4’21 that paves the way for a rebound in GDP. Positive spillovers from external demand will also provide further impetus to the recovery pace ahead,” UOB said in a note yesterday.
On the external front, the research house is keeping an eye on uncertainties with Covid-19’s resurgence in some major countries (US, UK, and China), expected Fed’s QE tapering in the later part of this year (UOB’s projection for the first taper: Dec 2021), and pace of China’s economic slowdown.
It maintained its full-year Malaysia GDP outlook of 4% for 2021 (BNM forecast: 3-4%) and expects the key policy rate to be kept unchanged at 1.75% for the rest of the year.
UOB outlined that six states have transitioned into the second phase of the National Recovery Plan, while two states and one federal territory are under the third phase of the plan, while the rest remain under the strict lockdown of Phase 1. However, the government has introduced some relaxations to allow more business operations and social activities to commence as announced last week.
It noted that more companies from the manufacturing, construction, mining and quarrying sectors in the states under Phase 1 are now allowed to operate or increase their operating capacity based on their employees’ fully vaccination rates from August, while dine-ins are also allowed from Aug 20 for individuals who have completed their vaccination in states currently under first phase.