Economic outlook is improving but challenges remain

KUALA LUMPUR: Malaysia’s economic outlook has improved, with the Statistics Department describing March’s indicators as encouraging in the short term, but it expects the current challenges to persist until the Covid pandemic- 19 be controlled.

Chief statistician Datuk Seri, Dr Mohd Uzir Mahidin, said on Tuesday Malaysia’s leading index (LI) in March showed a significant increase with double-digit growth, an increase of 17.3% in ‘year on year to 113.3 points against 96.6 points in March 2020..

“This is the highest first annual growth recorded after a significant economic contraction in March 2020 due to the containment of the epidemic.

“In addition, LI’s performance was influenced by the strong growth in the number of approved housing units, actual imports of other precious base metals and other non-ferrous metals and the number of new businesses registered”, a- he declared.

Mohd Uzir said that compared to the previous month, the LI observed a similar trend registering 1.8% in March against 1.1% in February.

This growth was mainly based on actual imports of other precious base metals and other non-ferrous metals (0.8%) and the number of approved housing units (0.6%).

“In March 2021, the LI which indicates the ability to anticipate the economic direction in advance indicated a better economic outlook thanks to the movement of the smoothed LI growth rate,” he said.

The report released on Tuesday contained the LI economic indicators, coincident and lagging indices for March. The LI is a predictive tool used to anticipate economic recoveries and downturns in an average of four to six months ahead.

Although it expects uncertainty to persist, the Statistics Department has been optimistic about the economic outlook for the near future.

This was underpinned by the expected promising signs of merchandise trade performance in Malaysia as well as positive sentiment in the manufacturing sector, motor vehicle sub-sector and commodity prices.

“With the global economic recovery in sight, better economic performance was observed in most countries in the first quarter of 2021.

“China, Malaysia’s largest trading partner, experienced vigorous gross domestic product growth of 18.3 percent over the same period,” he said.

Meanwhile, the Coincident Index (CI), which measures current economic performance, showed better year-over-year growth at 4.1%, down from 2% in February 2021.

On a monthly basis, the CI rose to 0.1% supported by the increase in actual contributions to the Employee Provident Fund (1.4%), total employment in the manufacturing sector (0.5 %) and capacity utilization in the manufacturing sector (0.2%).

Malaysia has seen a record number of deaths and infections from Covid-19 in recent days, prompting the government to restore a movement control order (MCO 3.0) across the country from May 12 to June 7 .

With more stringent standard operating procedures (SOPs) enforced as part of the one-month MCO 3.0, this could reduce GDP growth to around 5% to 6.5% for 2021, from 6% to 7.5% previously forecast. by Bank Negara Malaysia.

During MCO 1.0 (March 18 to May 3, 2020), Malaysia lost around RM 2.4 billion per day, while MCO 2.0 (January 13 to February 18, 2021) cost the country around 300 to 400 million RM per day.

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