KUALA LUMPUR, April 30 — Malaysia’s leading economic index declined 0.8 per cent month-on-month in February 2020 following a 0.1 per cent gain in the prior month, providing cues on what to expect for economic performance in the June-August 2020 period.
The hardest fall since May 2019 was mainly due to expected sales value in manufacturing and the number of housing unit approved sector, which dropped 1.2 and 0.8 per cent respectively, MIDF Research said in its monthly economic review report for April 2020, today.
“Annually, the index increased 1.7 per cent after a 0.7 per cent rise in January 2020 due to lower base effect. However, the economic direction portrayed is compiled based on selected economic indicators irrespective of shocks in the economy.
“Hence, the current Covid-19 pandemic is expected to take a toll on economic growth. Economic contraction for the second quarter 2020 (2Q20) is largely expected while we opine that there might be a gradual recovery starting 3Q20, depending on Malaysia’s progress in containing the outbreak,” it said.
The research firm said that it would also depend on how the rest of the world, particularly Malaysia’s key trading partners are combating the spreading virus as it will affect global demand for its products, with the economic stimulus package is anticipated to provide some cushions to the adverse impact resulting from Covid-19.
Meanwhile, it said Malaysia’s retail sales expanded by 6.4 per cent year-on-year (yoy) in February 2020, the lowest growth since September 2015 but still considered solid in comparison to other key countries such as Singapore and Indonesia which experienced contraction.
“In fact, Vietnam’s retail sales recorded a sharp slowdown of 4.0 per cent yoy in the same month after 13 months of double-digit growth. In a similar note, wholesale trade recorded slightly slower growth of 5.1 per cent yoy.
“In contrast, motor vehicles sales increased at a higher pace of 3.7 per cent yoy partially due to low base effect. Distributive trade in overall grew 5.5 per cent yoy. On monthly basis, wholesale and retail trade registered tepid negative growth while those of motor vehicles increased,” it said.
Moving forward, MIDF foresees quite a significant moderation in distributive trade growth as consumers change spending pattern from discretionary to necessity.
“Significant slowdown could be observed in March 2020 and April 2020 as consumers stay home due to the movement control order. Motor vehicles sales are likely to be affected the most as consumers hold purchases for big ticket items,” it added. — Bernama
