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       PETALING JAYA: Flash floods, shortage of foreign workers and raw materials, as well as rising price pressures, may have affected Malaysia’s economic recovery in the fourth quarter of 2021 (Q4’21).

       All the impediments, however, will not stop the economy from rebounding in the October to December period, following a contraction of 4.5% in Q3’21.

       Economists are generally positive on the fourth-quarter gross domestic product (GDP) performance to be announced today, although some expect growth to be weaker than their forecasts.

       CGS-CIMB Research expects the Q4’21 GDP to grow by 4.1% year-on-year (y-o-y), slower than its previous forecast of 5% y-o-y.

       This would lift the full-year economic growth to 3.3% y-o-y in 2021, which is also slightly lower than the brokerage’s forecast of 3.5%.According to CGS-CIMB Research, the GDP growth may not hit its earlier projections, considering the country’s consumption rebound was not as strong as expected.

       It also pointed out that there was an uneven recovery across sectors.

       “Manufacturing activity led the GDP rebound, the services sector was not as strong as expected and construction activity remained the laggard.

       “We see weakness in government services as a key downside risk to our 4.1% forecast for Q4’21,” it said in a note yesterday.

       The projections are based on the available data that cover more than 80% of GDP.

       TA Securities Research also thinks the GDP growth may come in below its expectation as it forecasts a strong rebound in the services segment in Q4’21 previously.

       In a note yesterday, the research house said available data suggested that the lifting of nationwide movement restrictions in Q4’21 has positively contributed to the economy.

       “Despite the rebound of the services index, it came in below our expectation.

       “Based on the volume index of services data, we are now foreseeing the services sector in the Q4’21 GDP to probably increase between 4% and 5% (Q3’21: -4.9% y-o-y).

       “That will lead the fourth-quarter GDP growth to be lower than our projected 6.3% y-o-y,” it said.

       It is noteworthy that the services sector contributed about 56.7% of the GDP in Q3’21.

       Commenting on other sectors, agriculture is expected to rebound in Q4’21 following higher production of crude palm oil, according to TA Securities Research.

       The manufacturing sector is also expected to post a strong recovery in the final quarter, considering the higher manufacturing production growth in Q4’21.

       On the other hand, a modest recovery is seen in the construction sector as the value of construction work done in Q4’21 declined at a smaller pace compared to the third quarter.

       “Mining sector posted a smaller pace of decline during the quarter, implying a lesser pace contraction for mining GDP,” it said.

       Overall, TA Securities Research said Malaysia’s economic performance has picked up since August 2021, reflecting an increase in economic activity as containment measures are progressively relaxed.

       For the full-year 2021 GDP, the research house expects a growth rate that is slightly lower than its earlier expectation of 3.9%.

       In comparison, the government’s official growth forecast for 2021 is 3% to 4%.

       Meanwhile, Hong Leong Investment Bank (HLIB) Research expects a growth of 3.1% in 2021, lower than its initial forecast of 3.5%.

       In Q4’21, apart from construction and mining, HLIB Research said other economic sectors are projected to post a recovery.

       On the expenditure front, it said Malaysia’s strong net export performance is expected to contribute to overall Q4’21 GDP, driven by robust external demand for semiconductors and elevated commodity prices.

       In addition, private consumption is expected to turn positive, supported by the reopening of economic activity and increased tourism spending amid improvements in labour market conditions.

       This is reflected by increased wage growth in the manufacturing and services sectors, as well as a downtrend in the unemployment rate.

       Looking ahead, HLIB Research believes growth momentum is expected to continue into 2022, with further normalisation of economic activities.

       While manufacturing activity may be affected by supply chain disruptions and raw material shortages, the sector is expected to continue its growth.

       “The continued recovery in the labour market and possible reopening of international travel without quarantine would lend further support to the economy.

       “While headwinds may persist from continued virus prevalence leading to cautious sentiment among businesses and consumers, this may be partly mitigated by acceleration in booster vaccinations and healthcare capacities sustaining at manageable levels.

       “We maintain our 2022 GDP forecast at 5.5% y-o-y,” it said.