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Cautious optimism on return of consumer confidence and sentiment in 2021

KUCHING: There is cautious optimism on the return of consumer confidence and sentiment in 2021 and Malaysian households will remain financially sound.

According to Affin Hwang Investment Bank Bhd (Affin Hwang Capital) going into 2021, as a highly open and trade-dependent economy, Malaysia’s real gross domestic product (GDP) growth and external demand will likely be influenced by the state and health of the global economy, which is anticipated to be better than 2020.

“Domestically, in 2021, we are cautiously optimistic that consumer confidence and sentiment will return and Malaysian households will remain financially sound, with healthy financial buffers to service debt obligations as well as improvement from recent temporary shocks to their incomes,” the research firm said.

“Consumer spending will be supported by improving employment conditions and stable incomes, as global and domestic economies recover next year.”

Private investment is also expected to be supported by revival of infrastructure projects in 2021, such as the MRT2, LRT3, and ECRL projects, as well as other approved infrastructure projects, Affin Hwang Capital noted.

“As private investment is highly correlated with external conditions, the anticipated better global economic growth prospects next year will support investment activity.

“Recently, there were some measures being introduced relating to tax incentives to help attract new manufacturing foreign direct investment (FDI).”

Going forward, the research firm believed the upcoming Budget 2021 strategy will also include other measures for improvement in foreign and domestic investment.

“Malaysia’s economic fundamentals will remain sound, supported by government’s fiscal discipline, a sustainable (though narrowing) current account surplus, healthy foreign-exchange reserves as well as manageable inflationary pressure.”

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Lim Li Yin

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