KUALA LUMPUR: The global economy will witness a V-shaped recovery in 2021 but will be more highly uneven than anticipated, Malaysian Rating Corporation Bhd (MARC) said.

According to MARC's 2021 Outlook report, the V-shaped recovery would be primarily driven by four main factors. 

"One, the global economy will unlikely record another drop in output, or a double-dip recession, as countries begin to reopen their economies and manage resurgences of Covid-19 in a more structured or targeted manner. 

"Two, the low base effect will take place from both quarter-on-quarter (Q-o-Q) and year-on-year (Y-o-Y) perspectives.  

"Three, a speedier resumption of economic activities correlates with the rate of vaccine deployment, and four, the rise of aggregate demand will pose risks to the stabilisation policy taken in 2020," the report said.

Back home, MARC said Malaysia's January 2021 gross domestic product (GDP) growth forecast came in at 6.4 per cent. 

Since then, back-to-back mobility restrictions have prompted the rating agency to shave off its earlier forecast to 3.9 per cent Y-o-Y for 2021, which is even lower than the previous review of 5.1 per cent. 

"This implies that the economy will perform two per cent below the pre-pandemic level this year. 

"Moving forward, Malaysia's growth outlook is solely dependent on how stringent mobility restrictions are," it said.

MARC said given the deteriorating economic and fiscal metrics, it expected a higher risk of a sovereign rating downgrade by another international credit rating agency.

"Having said that, a sovereign rating downgrade may not necessarily translate into lower overall economic sentiment or confidence per se throughout a historically low interest rate environment," it said.

https://www.nst.com.my/business/2021/07/708276/v-shaped-recovery-world-economy-marc