MIDF Research Expects Economic Activity in Malaysia to Continue to Recover From 4Q21 | Money

A bird’s eye view of Kuala Lumpur on July 8, 2020 – Photo by Hari Anggara

KUALA LUMPUR, November 1 – MIDF Research expects economic activity to continue to recover in line with states transitioning into the final phase of the national stimulus package and further easing of foreclosure restrictions.

In his monthly economic review, he said the recovery in domestic spending and business activities will support gross domestic product (GDP) growth from the fourth quarter of 2021 (4Q21) as confidence improved after the reopening of the economy and improvement of local Covid. 19 situation.

“In addition, Malaysia will continue to benefit from growing global demand, especially for electrical and electronic (E&E) products and raw materials.

“While full foreclosure will reduce growth in 3Q21, we expect the economy to return to a recovery path from 4Q21,” he said.

MIDF Research said while maintaining its GDP growth forecast for 2021 at + 4.6% yoy (yoy), it remained cautious that risks to the outlook could come from bottlenecks in the chain. global supply, China’s economic slowdown and uncertainties. surrounding the global health crisis.

At the same time, the research firm noted that Malaysia’s leading index (LI) contracted -2.3% year-on-year (year-on-year) on August 21 (July 21: -4 percent year-on-year).

The slower decline in the LI signals an improvement in Malaysia’s growth momentum in the near term.

The downward drag in the LI reflects the reduction in the number of dwellings approved during the month. Compared to the previous month, the LI rebounded and increased + 1.1% mo (mo) compared to July 2021 by 0.6% mo, the first monthly expansion after four consecutive months of decrease.

The monthly increase was supported by increases in the expected value of manufacturing sales; Bursa Malaysia Index; actual imports of other precious and non-ferrous base metals; and actual imports of semiconductors, he said.

The research firm said improving current economic conditions were reflected in the coincident index (CI )’s slower -1.1% yoy contraction (July 2021: – 5.2% yoy). GA), attributable to the recovery in domestic manufacturing and consumption. activities in the context of the easing of restrictions and the transition of states to the next phases of the national stimulus plan.

He also expects producer price index (PPI) inflation to remain high, supported by challenges posed by supply chain bottlenecks, logistics delays, as well as high energy and input prices.

“Not only has PPI inflation remained above Consumer Price Index (CPI) inflation since January 2021, but the gap has also widened in recent months, with PPI inflation accelerating further. compared to more stable CPI inflation.

“Therefore, we expect consumer prices to continue to rise as producers pass cost increases on to consumers,” MIDF Research said. – Bernama

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