Fitch slashes Malaysia growth to 0% for 2021

Fitch Solutions has revised Malaysia’s 2021 gross domestic product (GDP) growth to 0% from its earlier estimate of 4.9%. This comes as the second quarter 2021 (2Q21) GDP growth numbers were below its expectation, at 16.1% year-on-year (y-o-y) but a contraction of 2% quarter-on-quarter (q-o-q). In a commentary today, the research unit of the Fitch Group noted that the daily Covid-19 cases in the country have not come down despite the nationwide lockdown. Fitch Solutions does not think Malaysia will achieve herd immunity before the end of 2021 despite the accelerating vaccine rollouts, thereby ruling out a potential economic surge at the later part of the year. Along with Fitch Solutions’ dim outlook of the country’s economic prospects, it has also reduced its net export forecast. It now forecasts exports to grow by 16.1% and imports by 18.4%. It reasoned that despite the Malaysian government opening up more industries, external demand will likely be more affected than previously expected given the severity of Covid-19 outbreaks happening in the region.