In the BNM Annual Report 2021, the central bank sees a stronger economic recovery in 2022 with a growth projection of 5.3%–6.3%, which is in line with our projection of 5.6%–6.0% with 4.8% as the worst case. Growth will be supported by several factors, including continued expansion in external demand underpinned by the tech upcycle, reopening of international borders, higher vaccination rates, improvement in the labour market and continued access to targeted policy measures.

Risks however are tilted to the downside, including Covid-19 pandemic developments, geopolitical conflicts that will push up commodity prices and further disruptions to supply chain, slower-than-expected rollout of public infrastructure projects, slower growth in trading partners such as China, and elevated cost and price pressures that raise the cost of living and profitability concerns.

Key highlights

• 2022 GDP is projected to grow 5.3%–6.3%. Our base case projection is at 5.6% with the downside at 4.8% and upside at 6.0%.

• Inflation is expected to hover between 2.2% and 3.2% in 2022.

• BNM is projecting the unemployment rate to improve to around 4.0% in 2022

• Current account balance to be 4.2%–4.7% of GDP in 2022

• Businesses rebounded but downside risks remain with uneven recovery of certain sectors including mining, hotel & tourism, and real estates.

• Household debt saw improvements, where the ratio of household debt-to-GDP ratio fell to 89.0%

• The property market remains vulnerable as new emerging trends are changing the way traditional commercial real estate sector works.

Source: AmInvest Research - 31 Mar 2022