THE on-going measures to contain the spread of Covid-19 will affect the consumer sentiment index (CSI) and business sentiment index (BSI) in the second and third quarters of this year before making a gradual improvement in the fourth quarter.
Public Investment Bank (Public IB) said the impact of Covid-19 could be partial in the first quarter given that the Movement Control Order (MCO) only began on March 18.
“Therefore, we expect both indices to be weak in the second quarter given the longer MCO period that would run from April to May,” it said in a research note today.
It said uncertainty caused by the pandemic might push both indices to remain below neutral for an extended period of time which is consistent with the investment bank’s projection for private consumption and gross fixed capital formation.
“Systemic risks caused by Covid-19 will also affect the headline gross domestic product (GDP) in 2020 and inflation with a negative effect on unemployment level,” it said.
It said a rebound could be forthcoming once the economy is on an even keel provided that a vaccine for Covid-19 is available.
The investment bank said fragile consumer sentiment has been compounded by the uncertainty of life post-Covid-19.
“Sentiment may improve once the vaccine is available with the month of October, possibly the earliest date anyone could come up with one. The next year 2021 is anticipated to be a better year for both indices with economies likely to have regained momentum,” it added. — April 29, 2020, Bernama
