KUALA LUMPUR (Dec 29): Economists have maintained their 2020 gross domestic product (GDP) growth forecasts for Malaysia after November exports fared better than the consensus estimate.

Hong Leong Investment Bank Research's (HLIB) Felicia Ling and Goh Khing Mae said in a note today export growth picked up to 4.3% year-on-year (y-o-y) in November, faring better than the 3.1% y-o-y consensus estimate.

“Growth was lifted by manufactured exports amid a decline in commodity-related exports,” they said.

While downside risks continued to cloud the recovery in overall trade activity owing to the resurgence of Covid-19 cases, they opined that vaccine roll-outs in some major economies are anticipated to alleviate some of the risks in 2021.

They maintained their 2020 and 2021 GDP growth forecasts for Malaysia at -5.5% and +6% respectively.

Meanwhile, Affin Hwang Capital analysts Alan Tan Chew Leong, Naomi Margaret Kasimir and Mas Aida Che Mansor maintained their full-year growth forecast of a contraction of 5% y-o-y in 2020, lower than the official projection of -4.5%.

“For full-year 2021, we expect real GDP growth to turn around and expand by 6%, lower than the official forecast of between 6.5% and 7.5%,” they said.

They noted that uncertainties surrounding the development of the Covid-19 pandemic would continue to be a downside risk to the growth outlook, especially with the resurgence of Covid-19 cases in some main trading partners of the country, such as the US and European Union (EU) countries.

CGS-CIMB Research economist Michelle Chia and Lim Yee Ping also maintained their export and import growth forecasts of 10.9% and 11.5% respectively for 2021, driven by vaccine and broader economic normalisation.

They also maintained a constructive view of the GDP recovery (+7.5% in 2021 versus -5% in 2020), with inoculation programmes being gradually rolled out domestically and abroad being a key catalyst for the relaxation of mobility restrictions.

Meanwhile, PublicInvest Research analyst Dr Rosnani Rasul highlighted that trade could produce a full recovery in 2021, especially after challenging periods caused by US-China trade tensions and the Covid-19 pandemic.

“The prospect of mass global Covid-19 inoculations will pave the way for demand to recover and for the supply chain to normalise.

“The breakthrough in Covid-19 vaccines will remove the largest drag on growth and therefore an expected rebound in trade in 2021,” she said.

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