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Economy Malaysia: Heading towards recovery BUT…

Investment

Economy Malaysia: Heading towards recovery BUT…

What’s happening to Economy Malaysia. Up or still Down?

If you attend any property talk, do ask the speaker about the economic growth and the effects on property market. More often than not many fail to realize that for the property market to remain vibrant or even under the growing phase, the economy must move first. This is why when there are articles about ‘Economy Malaysia’, I will definitely cover it. This gives everyone another understanding about the potential for the property market.

Article in edgeprop.my DBS Bank said Malaysia’s economy is starting to recover gradually from the Covid-19 crisis following a tumultuous 2020 and 2021, but is maintaining its growth forecasts of 4% for 2021 and 5% for 2022.

It said in a note, “An emerging recovery is helped by vaccinations reaching critical mass and falling infection rates, allowing for a safer and wider domestic reopening, and considerations to relax international border restrictions. In our view, supportive economic policies — as seen from the expansionary Budget 2022 — should also bode well for growth prospects going into 2022.”

However there are issues such as China’s growth slowdown which is a dark cloud preventing Malaysia from expanding at a faster pace. It also expects Malaysia to take the first step in raising its overnight policy rate by 25 basis points (bps) in the second half of 2022, from 1.75% currently.

Malaysia’s government borrowings are expected to stay elevated in 2022 with net domestic borrowings projected to be at RM97 billion, very close to 2021’s estimated size of RM98.8 billion. Please do read the full article here: Article in edgeprop.my

When the economy recovers…

People with more stable job outlook will start to think of investing into a property versus renting to preserve the cash (down-payment). It’s a simple fact that when times are uncertain, people will prefer to keep cash versus buying something which may tie up all funds such as a property of RM500,000 or higher. It’s just not that comfortable especially with unemployment creeping upwards.

Businesses will be more willing to invest for potential future gains. For example, buying better machines, investing into a bigger commercial property for future business expansion and with all these new investments, it meant that they need more manpower. This will drive the property market as well as to increase the number of jobs. When there are more jobs, more consumption will soon follow.

Generally, sentiment will be positive when Economy Malaysia is a positive one. No one likes a negative number every quarter. These are some of the reasons why economic growth will drive the demand in the property market. Just need to note that bad properties remain bad properties regardless of the economy yeah. Sometimes, buying an overpriced property will mean many years of holding on… or sometimes they say, hanging on… Happy reading.

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Next suggested article: RPGT removal is good for the property market, right?

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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