Uneven recovery ahead for Malaysia's economy in 2022: EPF official

Malaysia's recovery in 2022 is expected to be uneven across different sectors with export trends doing well but imports not recovering as much, which indicates a weaker domestic economy, said a senior official at the country's Employees Provident Fund (EPF).

"Almost 10 per cent of GDP has been lost in the past couple of years (due to the pandemic) and that obviously has an impact on Malaysia's progress," said Nurhisham Hussein, chief strategy officer of the EPF, Malaysia's compulsory pension scheme for all citizens and permanent residents working in the country.

He made these points during the Regional Outlook Forum event organised by the Iseas-Yusof Ishak Institute, a Singapore-based research centre.

Nurhisham noted that Malaysia's trade, travel and the tourism industries continue to be heavily affected by the pandemic. Exports are primarily driving the recovery, with retail trade becoming increasingly important in terms of its contribution to GDP.

"However, retail, which is basically shopping, is not a great basis for economic growth going forward. There is a need to look at how our economy is structured and the complexity of the output we export. There are a lot of areas that can be built on and we have small pockets of innovation that can be boosted, but they need official support to really grow," he said.

The recovery of Malaysia's economy remains highly uncertain in the long run as it is contingent on interacting factors such as the Omicron variant, an international retreat on globalisation due to the pandemic, and the country's ageing population that will have an impact on the labour force.

"The Delta virus hit our region late compared to countries such as the US and in Europe, and we are just coming out of it and seeing a recovery. But the prospects have gotten a little murkier with Omicron coming in," he said.

"Currently, it looks like things are under control but it depends on how fast Omicron propagates. We could be seeing the fourth wave sometime later in the first quarter, which will obviously have an impact on growth," said Nurhisham.

He added that there is a need to look into greater economic restructuring as Malaysia looks to emerge from the pandemic.

"The next decade will see a lot of experimentation on economic policy, simply because the problems we are currently facing are those that we have never encountered before," he said.