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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the recent decision by the Bank Negara Malaysia (BNM) to revise down the GDP figures for the current year.

Key Quotes

“Bank Negara Malaysia (BNM) projects the 2020 GDP outlook between a range of -2.0% to +0.5% (UOB 2020f: -3.5%; 2019: +4.3%). This is markedly lower compared to the revised Ministry of Finance’s (MOF) forecast of an expansion of 3.2%- 4.2% as the global economy is now projected to register a negative growth this year with the ongoing COVID-19 pandemic and various containment measures that would weigh significantly on growth prospects.”

“The 2020 stimulus measures that were announced by the government are expected to add 2.8% pts to GDP, of which 1.0% pts is from the continuation of MYR15bn worth of mega infrastructure projects. The policy measures will help mitigate the severe impact of COVID19and avert a sharper contraction in economic activity in 2020.”

“Headline inflation is projected between -1.5% to +0.5% in 2020 (2019: +0.7%) amid weaker global oil prices and subdued demand. BNM underscores that they have a range of tools to ensure monetary and financial stability including monetary policy, macro and micro-prudential policy and supervisory oversight. We have factored in additional Overnight Policy Rate (OPR) cuts of 50bps to 2.00% as we anticipate broader and intensified weakness in 2Q20 with potential spill overs to 3Q20.”