KUALA LUMPUR: Bank Negara Malaysia is expected to hold off policy tightening in 2022, according to Manulife Investment Management Asia macro strategy head Sue Trinh said.
This would be consistent with the general view that Asia would follow the global policy normalisation cycle, Trinh added.
She said other factors that would drive economic growth for Malaysia this year were the pick up in mobility, thanks to the very accelerated vaccination trends, as well as the expected increase in the government spending ahead of the upcoming general election.
"Really, this is shaping up to be the goldilocks style regime for Malaysia this year. A more sequential base of gross domestic product (GDP) is expected to really narrow that output gap in 2022 versus 2021, leaving Malaysia only around 10 per cent below trend," she said during Manulife Investment's 2022 outlook media briefing today.
The central bank is expected to release its latest overnight policy rate (OPR) statement after its Monetary Policy Committee this afternoon.
Trinh's view aligns with other economists expectation that the central bank is likely to keep its OPR unchanged at 1.75 per cent for most part of 2022.
Maybank Investment Bank Bhd chief analyst Suhaimi Ilias said the OPR would likely continue to stay at a record-low of 1.75 per cent before a 25 basis point (bps) hike to 2.00 per cent in the fourth quarter (Q4) of the year.
Meanwhile, Manulife Investment equities senior portfolio manager Kenglin Tan said Malaysian companies were expected to recover from almost two years of Covid-19 related lockdown and low productivity period.
"If we just look at the earnings growth expectation for the market, it was actually driven by some of the key export sectors especially the rubber gloves sector and key exporters in the technology sector.
"And for that purpose, devaluation and earnings growth outlook may not look as attractive relative to their Asean peers. From there, we have to be very very selective in terms of the way we invest and identify companies to invest in."
Tan added that the firm was focusing on companies in Malaysia that had been dragged down by Covid-19.
"We will have high operating leverage when they recover and when activities resumed to normal," she said.
