KUALA LUMPUR, Feb 9 — RAM Ratings Services Bhd has estimated Malaysia’s gross domestic product (GDP) to contract by 2.8 per cent in the fourth quarter of 2020 (Q4 2020) amid the restriction imposed under the conditional movement control order (CMCO).
In a statement today, the credit rating agency said this will be the third consecutive quarter of contraction in 2020, leading to a 5.4 per cent contraction for the full year.
RAM said the contraction in Q4 2020 is expected to be slightly more pronounced than the preceding quarter, underscored by various supportive policies, and as most sectors continued to operate during the CMCO.
“We expect the manufacturing sector to be the main growth driver in Q4 2020, with a 3.2 per cent expansion.
“The sector’s capacity, as indicated by the Industrial Production Index, remained fairly stable during the quarter,” it said.
Nonetheless, the agency expects all other sectors to post negative growth, with retail sales, one of the hardest-hit sectors, saw its growth rate deteriorating to -2.9 per cent in Q4 2020.
RAM Ratings said the domestic economy is facing further headwinds in the first quarter of 2021 with the imposition of the movement control order (MCO) 2.0.
“With MCO 2.0 now extended until Feb 18, we have revised our full-year GDP forecast from 5.8 per cent to 5.5 per cent.
“Every additional day of MCO extension is estimated to trim 0.04 percentage points, or about RM500 million to RM600 million, off economic growth this year,” it added. — Bernama
