Malaysia’s economic recovery momentum may be derailed by COVID-19 surge
KUALA LUMPUR, Aug 27 — Malaysia’s economic recovery momentum may be derailed by the record-breaking daily new COVID-19 cases, dimming prospects for stronger performance in the third quarter despite the ongoing vaccine rollout, the Department of Statistics (DOSM) has warned.
“Given the scenario, the Leading Index (LI) posted a slower annual growth of 0.5 per cent in June 2021, however, the LI declined 2.8 per cent month-on-month. As such, a challenging economic outlook is forecast for Malaysia in the months ahead,” said DOSM chief statistician Datuk Seri Mohd Uzir Mahidin in a statement today in conjunction with the publication of the latest Malaysian Economic Statistics Review (MESR).
Accordingly, Bank Negara Malaysia (BNM) has revised its full-year gross domestic product (GDP) growth forecast for Malaysia to between 3 and 4 per cent from the previous estimate of between 6 and 7.5 per cent for 2021.
Mohd Uzir noted that the United States, the United Kingdom, China, Taiwan, South Korea, and ASEAN have shown signs of economic expansion.
As for Malaysia, the GDP surged to 16.1 per cent in the second quarter after four consecutive quarters of contraction, attributed to low base effects while “on the supply side, it was supported mainly by the continuous growth in the manufacturing sector which grew by 26.6 per cent and the rebound in the services sector at 13.4 per cent compared to a decline of 2.3 per cent in the preceding quarter,” he said. “Nevertheless, on a quarter-on-quarter seasonal adjustment, the GDP contracted 2 per cent from a growth of 2.7 per cent in the preceding quarter.”
For the first half of 2021, the domestic economy grew by 7.1 per cent against a decrease of 8.4 per cent in the same period last year.
DOSM said Malaysia’s current account balance posted a surplus of RM14.4 billion in the second quarter, soaring 17.2 per cent from the first quarter of 2021, “contributed by the better performance in goods as well as the lower deficit in secondary income.”
The Goods account posted a higher surplus of RM40.7 billion as both exports and imports of goods showed encouraging performances in the second quarter.
Exports surged by RM18.5 billion to register RM244.0 billion while imports increased by RM14.5 billion to RM203.4 billion, and foreign direct investment continued to record an inflow of RM8.2 billion.
Direct investment abroad by Malaysian investors registered a net outflow of RM4.0 billion in the quarter.
Malaysia’s total trade surged 39 percent year-on-year, mainly driven by the low base effect and better external demand while trade surplus increased RM56.4 billion, 122.7 percent higher than the second quarter of 2020.
In the labor scenario, the number of employed persons inclined 2.2 percent year-on-year to 15.21 million persons compared to the same quarter of last year (14.88 million).
“The upward trend was also observed for the employment-to-population ratio which rose by 0.4 percentage points to 65.0 per cent. Meanwhile, the unemployment rate dropped by 0.3 percentage points to record 4.8 per cent,” Mohd Uzir said.