KUALA LUMPUR, July 22 (Xinhua) -- Fitch Solutions Country Risk and Industry Research (Fitch Solutions) said Thursday it believed that Malaysia's consumer spending recovery will spill into 2022 as Malaysian consumers will continue to face headwinds stemming from prolonged COVID-19 related economic pressure.
The Fitch unit said in a note that it has revised down Malaysia's real household spending growth forecast for 2021 to 3 percent year-on-year from the previous forecast of 11 percent year-on-year due to surging COVID-19 cases and the re-implementation of stricter restrictions on movement.
While the growth forecast signaled a recovery from the 3.7 percent year-on-year contraction estimated over 2020, Fitch Solutions highlighted that the growth was partly caused by base effects.
In nominal terms, total household spending will be worth 900 billion ringgit (about 217 billion U.S. dollars) in 2021, slightly lower than the 905 billion ringgit estimated for the pre-COVID-19 environment in 2019.
While Malaysia's consumer confidence has been improving from the deep slump caused by the initial COVID-19 pandemic, Fitch Solutions said it has yet to reach its pre-COVID-19 level, and it believed it will only happen once the country is able to vaccinate enough of its population to allow for the gradual lifting of restrictions.
Due to Malaysia's movement restrictions and limited fiscal space to offer renewed support, the research house also revised down Malaysia's 2021 real gross domestic product growth forecast to 4.9 percent from 10 percent previously.
"The recent lockdown will result in a resurgence in unemployment, which would significantly dim the prospects for a recovery in domestic demand, with government consumption unlikely to provide meaningful support," it said. Enditem