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Julia Goh, Senior Economist at UOB Group, and Economist Loke Siew Ting, assess the latest GDP figures in Malaysia.

Key Quotes

“Real GDP fell further by 0.5% y/y in 1Q21 (4Q20: -3.4%). It matched our estimates but better than Bloomberg consensus estimates (-0.9%). On a seasonally adjusted quarterly basis, real GDP rose 2.7% (4Q20: -1.5%). The improvement came despite the reintroduction of Movement Control Order (MCO 2.0) between 13 Jan and 4 Mar.”

“Key sectors that expanded were manufacturing (6.6%) and agriculture (0.4%). Other sectors recorded narrower declines – services (-2.3%), mining (-5.0%), and construction (-10.4%). Private consumption was less negative (-1.5%) while private investment edged up 1.3% and net exports rose 0.8%. Government consumption rose 5.9% but public investments declined 18.6%.”

“With the latest tightening of measures under a nationwide Movement Control Order (MCO 3.0) from 12 May to 7 Jun, we now expect moderately higher impact on the economy (about 1%-2% of GDP) compared to MCO 2.0. The negative impact is partly mitigated with most economic sectors allowed to operate while targeted policy support is in place to aid affected segments. Despite potential downside risks, we keep our 2021 GDP growth target at 5.0% for now, premised on a recovery from 2Q21 onwards with low base effects, improving global recovery and ongoing policy support. Meanwhile, the domestic vaccination program is expected to accelerate from mid-year onwards as more vaccines arrive that could help lift sentiment.”

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