Malaysia: GDP risks a deeper pullback in Q420 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting give their views on the upcoming release of Q4 GDP figures in Malaysia.

Key Quotes

“Based on the newly released industrial production and services statistics, Malaysia’s economy is poised to reverse course and fall into a deeper decline of 3.8% y/y in 4Q20 (from -2.7% in 3Q20; Bloomberg consensus: -3.1%). This will bring full-year real GDP contraction to 5.7% in 2020, based on our estimate.”

“All key sectors (except manufacturing) are estimated to post larger declines following the reinstatement of the Conditional Movement Control Order (CMCO) to contain the spread of COVID-19 infections during the quarter. Stricter measures are expected to weigh on overall services sector, except for information & communication, finance & insurance, and government services sub-segment.”

“2021 kicked off with more domestic challenges as tighter containment measures were introduced and a state of emergency was announced as part of wider efforts to contain the COVID-19 pandemic. The negative impact is moderated by allowing more economic sectors to open subject to strict operating measures. The growth trajectory is expected to improve from 2Q21 onwards, aided by a low base effect and further improvement in the global economy. The vaccination program that will begin in early Mar alongside supportive fiscal and monetary measures will also help lift sentiment. We keep our 2021 GDP growth target at 5.0% (official forecast: 6.5%-7.5%).”