KUALA LUMPUR: Speedy Covid-19 vaccine rollout will boost consumption and commodity prices worldwide and subsequently hasten Malaysia's economic recovery, bankers and industry leaders said.
They cautioned that Malaysia's growth outlook would be prone to considerable downside risks such as unexpected delay in vaccine rollout, ineffective Covid-19 containment and domestic political uncertainty.
The World Bank economist Richard Record expects the vaccine deployment can be mostly completed in 2021 in most economies.
This will lead to strong recovery and demand, as well as boosting trade and commodity prices.
After a 5.8 per cent contraction in 2020, the World Bank expects Malaysia's economy to grow 6.7 per cent this year, reflecting a broad-based rebound in consumption, investment and exports.
The low-case economic growth for Malaysia was likely to be at 5.6 per cent, Record said at the virtual "2021 Malaysia Economic and Strategic Outlook Forum" organised by KSI Strategic Institute for Asia Pacific today.
Statistics Department chief statistician Datuk Seri Dr. Mohd Uzir Mahidin, who also spoke at the forum, said Malaysia's external trade was likely to grow by 3.9 per cent this year.
Exports of goods are expected to increase 2.7 per cent due to the recovery in global trade and supply chains.
Uzir said the country's imports could increase by 5.3 per cent on the back of improvement in all types of imports.
However, inflation might make a comeback in 2021 after a deflationary trend this year as the pandemic suppressed demand for goods and services.
"This is thanks to the early roll-out of a safe and effective Covid-19 vaccine and unleashing of pent-up demand in conjunction with supply shortages, which could result in an inflation comeback," he said.
AirAsia Group Bhd chief executive officer Tan Sri Tony Fernandes said news of the vaccines being rolled out nationwide from this week was the first key indicator of a global travel reboot in the near future.
He said the group's key international markets including Indonesia, Singapore, China and Australia were progressing well with the vaccination programme, while other regional countries such as Thailand and the Philippines were scheduled to begin their programme by March this year.
"After a year of uncertainty, it's great to see that this extremely challenging chapter is finally coming to a close," Fernandes said in a statement today.
"Better testing, leisure travel bubbles, anti veil medicines and importantly, digital health passports providing a single tool for health records across Asean and beyond, are also coming soon, to support the global travel recovery," he added.
Asia Pacific Investment Bank director of asset management department Lai Heow Gran said the programme running as scheduled would curb the spread of the pandemic and help drive the economic recovery.
However, there is a danger of the economy being at risk if the speed of administering the vaccination is unable to keep up with the evolution of the virus.
Lai, who expressed this view at APIB's online webinar last week, said Malaysia's Leading Indicator Index had risen to 7.1 per cent last November from 6.3 per cent in October), with exports of semi-conductors being the key contributor.
"The economies of Singapore and China are already beginning to recover, and Malaysia is expected to benefit as the two countries are its largest trading partners," he added.
He expects Bank Negara Malaysia's overnight policy interest rate to remain at 1.75 per cent in the first half of 2021 to drive market growth and maintain the loose monetary policy.
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