UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest GDP data for the Malaysian economy.
Key Quotes
“Real GDP contracted by 3.4% in 4Q20 (3Q20: -2.6%), bringing the full-year contraction to 5.6% (2019: +4.3%). This came in close to Bloomberg estimates (-3.1%) and better than ours (-3.8%). On a seasonally adjusted quarterly basis, real GDP fell 0.3% q/q. The recovery path hit a speed bump in 4Q20 amid the reinstatement of Conditional Movement Control Order (CMCO) to contain the spread of COVID-19 infections.”
“Key sectors that declined include services (-4.9%), agriculture (-0.7%), mining & quarrying (- 10.6%), and construction (-13.9%). Manufacturing was the sole sector that expanded by 3.0% thanks to improved export demand. Private consumption and investment was weighed down by the resurgence in infections. Government consumption was supported by ongoing fiscal spending. Net exports rose amid higher demand for manufactured goods.”
“Despite the lingering domestic challenges and uneven recovery, we expect the growth trajectory to improve from 2Q21 onwards aided by a low base effect, further improvement in the global economy, and gradual normalization in domestic activity. Malaysia’s vaccination program that is slated to begin in early March, as well as ongoing fiscal and monetary support will help to lift sentiment and growth. Despite the impact of MCO 2.0, the near-term impact is expected to be less severe given that most economic sectors are allowed to operate. We keep our 2021 GDP growth target at 5.0% (2020: -5.6%).”
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