THE Malaysian economy might have been showing signs of improvement amid the Covid-19 pandemic, but downside risk remains, AmBank Research said in a note today.
The country’s June industrial production (IP) saw an uptick for a second consecutive month as all sub-sectors posted improved output.
“IP rose 22.6% m/m after growing by 18.9% m/m in May. All the sub-sectors rose in June. On an annual basis, the IP fell at a smaller pace by -0.4% from -21.6% in May,” AmBank said.
The smaller contraction was due to stronger manufacturing which compensated the decline in mining and manufacturing, the research house said, but “the economy is likely to register negative GDP growth of around -10% to -11% for the quarter from +0.7% in 1Q2020.”
The labour market also witnessed an improvement in June as unemployment eased to 4.9% after a three-decade high in May at 5.3%. The number of those unemployed stood at 773,200 from 826,100 in May or a drop of around 52,900 jobless people.
“A total of 102.3K jobs were created in June, bringing the number of employed persons to 15.0 million, versus 14.9 million in May.
“The job creation was concentrated in the services sector, such as e-commerce, delivery services and ICT-related activities. Another key point to note is that the number of employed persons who were temporarily not working fell from 2.27 million in May to 0.77 million in June,” AmBank said.
But the research house warned that downside risk to the economy remained.
“The risk of the second wave of the crisis remains besides trade and political noises. On the labour market, challenges remain after the wage subsidy programme ends.
“Underpinned by uncertainties, we expect the full-year GDP to grow around -2% with the downside at -5% for 2020,” AmBank said. – Aug 10, 2020
