Malaysia’s GDP growth is forecast at 7% in 2022 according to Nomura Group, surpassing the general consensus of 5.8%, as the country prepares to reopen its borders following the high vaccination rate.

During an online media briefing on Friday, Nomura chief ASEAN economist Euben Paracueless said that Bank Negara Malaysia (BNM) will likely begin policy normalisation from Q3 next year.

“Malaysia is shifting to higher gear, together with strong public investment ahead of the general election. This will certainly accelerate the economic recovery.

“Some sectors (such as transportation and accommodation) have been pretty badly impacted by the Covid-19 pandemic, and I believe these sectors will catch up and rebound very fast to pre-pandemic levels,” he said. 

The Nomura economist forecasts the central bank will start to increase the overnight policy rate (OPR) in Q3 2922 by 25 basis points, highlighting Malaysia’s robust economic recovery.

“Another central bank in Southeast Asia that we are expecting to hike its rate is Bank Indonesia by the second half of next year,” he added.

Last month, the central bank held the OPR at 1.75% on risks the country’s economic growth outlook was tilted to the downside due to ongoing pandemic concerns, and as inflation is set to stay moderate.

“Going into 2022, the growth momentum is expected to improve, supported by expansion in global demand, higher private-sector expenditure in line with the resumption of economic activity and continued policy support.

"Given the uncertainties surrounding the pandemic, the stance of monetary policy will continue to be determined by new data and information and their implications for the overall outlook for inflation and domestic growth.

"The bank (BNM) remains committed to utilising its policy levers as appropriate to foster enabling conditions for a sustainable economic recovery,” according to a central bank statement.