KUALA LUMPUR, July 1 — MIDF Amanah Investment Bank Bhd has maintained its gross domestic product (GDP) forecast at 4.6 per cent this year as the extension of the lockdown is expected to affect certain business segments due to the temporary closure and limited consumer mobility.
In a research note today, it said the lockdown would likely be a temporary drag to the economy, especially in the middle of the year, and the eventual easing of the restrictions would allow for the reopening of the economy in the latter part of this year.
“This will, however, depend on the key indicators that have been outlined in the National Recovery Plan (NRP) mainly the number of new Covid-19 infections, the ICU utilisation rate and the vaccination rate of the general public.
“In other words, this decision to move into the next phases in the NRP depend on the state of the public health and the progress in the national vaccination programme,” it said.
The investment bank said to a certain extent, there seems to be a dual growth experience in the economy as the trade sector would continue to benefit from growing external demand but the weakness in domestic spending would affect domestic-oriented industries and selected services sub-sectors such as the wholesale and retail trade, accommodation and even the transport services industries.
On a positive note, it said the RM150 billion National People’s Well-Being and Economic Recovery Package (PEMULIH) fiscal stimulus package would provide support to the people and business community who are struggling because of the full nationwide lockdown.
It said undeniably, there are certain segments in the economy that are in difficulties to cope and survive, especially small and medium enterprises with cash flow problems and individuals who lost their source of income.
“The increased government spending with the additional policy support and the possible pent-up demand when the economy reopens later this year will be upside risks to the growth outlook,” it said.
The investment bank said Malaysia recorded a slower rise in leading index (LI) of 15.7 per cent year-on-year (y-o-y) in April 2021 compared to 17.2 per cent y-o-y in March mainly a reflection of slower activities compared to the previous month as the LI fell by 1.2 per cent month-on-month (m-o-m) in April against a growth of 1.8 per cent m-o-m in March 2021, indicating a potential slowdown in the near term.
It said consumer price index increased by 4.4 per cent y-o-y in May 2021, easing from 4.7 per cent in the preceding month and came in below the investment bank and market consensus forecast of 4.8 per cent and 4.6 per cent respectively.
Meanwhile, it said producer price index inflation accelerated further to 11.9 per cent y-o-y in May 2021 from 10.6 per cent in April 2021 as prices increased in all sectors particularly in agriculture, forestry and fishing industry as well as the manufacturing sector. — Bernama
