Malaysia, Singapore positioned to gain from global growth in 2022

KUALA LUMPUR – Malaysia and Singapore are positioned to gain from global growth in 2022, said Moody’s Analytics, reported Bernama.

It said both countries have been cautious in opening their borders to travellers despite being among the most aggressive with fiscal policy support for their economies over the past year.

“Malaysia is in the midst of an emergency order banning interstate travel,” Moody’s Analytics said in a commentary note on Wednesday.

The rating agency said China and its linkages through supply chains in the Asia Pacific (APAC) and the rest of the world could help Asia lead the economic recovery, much as it did following the global financial crisis of 2008-2009.

It noted that the focus on getting the production side of the economy back on track effectively allowed manufacturing to spark Chinaʼs recovery beginning in the second quarter of 2020, and lifted surrounding Asian economies in the quarter, as they eased up on many movement restrictions.

“Countries, including Vietnam, Malaysia, Taiwan and Indonesia, have benefitted from the carry condition of Chinaʼs growing trade demand,” said Moody’s Analytics.

Regional trade between China and the rest of APAC also depends upon stable demand for goods from Europe and North America, it said.

It added that the expected passage of the second United States’ stimulus bill strengthens the outlook for imports of goods into the US.

“However, demand for goods in Europe is at higher risk, at least in the near term,” said Moody’s Analytics.

It added that trade with China last year grew in percentage terms in double digits in Vietnam, Malaysia, Taiwan, Indonesia, Hong Kong, Japan, Thailand, and Singapore.

“It should be noted that this trade alone is not enough to guarantee full economic recovery. Containment of COVID-19 also is a necessary condition, which neither Indonesia nor Malaysia have yet managed to achieve,” said Moody’s.

While Chinaʼs recovery momentum boosted trade across APAC, the sustainability of regional export flows remains contingent on the collective effort to control the COVID-19 pandemic.

“Indonesia, the Philippines and Malaysia continue to struggle and may require more fiscal support, since they also run risks of additional quarantines or movement controls in coming months,” said Moody’s Analytics.

Aside from trade linkages, vaccination rates will further differentiate patterns of economic growth in 2020 but remain difficult to monitor in Asia, because there are little data available from consolidated sources.