ECONOMY

Malaysia’s economy was affected by political upheaval and prolonged movement restrictions for most of 2021. In the first nine months of 2021, the country’s Gross Domestic Product (GDP) climbed by 3.0% compared to a low base in the same period of 2020 due to the economic shutdown on the outbreak of COVID-19. The subsequent rise of new cases in the second quarter of 2021 (Q2/2021) has led to the Full Movement Control Order, and GDP has shrunk by 4.5% year-on-year (YoY) in Q3/2021, which reflects the difficulties posed by strict containment measures aimed at reducing the number of new cases caused by more virulent COVID-19 variants of concern (VOCs).

Nonetheless, the unemployment rate has dropped slightly from the previous quarter to 4.7% in Q3/2021 (Q2/2021: 4.8%), which translates to a reduction of 18,700 persons to 746,200 persons in the third quarter (Q2/2021: 764,900 persons). In general, the labour market has a positive association with economic performance. As a result of the National Recovery Plan’s (NRP) implementation, economic and service activities have been able to resume in accordance with the NRP’s phases scheduled by the Government. The economy is expected to gradually recover following the transition to Phase 4 of the NRP in October and the full capacity opening of all economic sectors, including the office sector.

We expect to see the office leasing market in Greater KL pick up as businesses reactivate relocation and expansion plans in the coming months. However, rental growth could prove to be limited.