AmResearch: Expect 2Q 2021 GDP to hover around 11%–13%

AS expected, the re-imposition of the movement control order (MCO 3.0) has continued to weigh on the manufacturing Purchasing Managers Index (PMI).

In July, the reading was 40.1 – below the 50 threshold – hence, marking a contraction. Poor output and new orders continued to weigh on manufacturing performance.

With average manufacturing PMI at 48.4 in 2Q 2021, this suggests downside risk for 2Q GDP growth. However, the downside was contained by exports orders which remained healthy.

Nevertheless, with exports averaging at 44% year-on-year (yoy) and expectations for export-led manufacturing activities to support overall industrial production and the PEMULIH stimulus measures, 2Q 2021 GDP could hover around 11%–13%, according to AmResearch.

“The downside is expected to be cushioned by exports which averaged at 44.0% yoy compared to 18.0% yoy in 1Q 2021 (2Q 2020 at -14.9% yoy),” opined AmResearch’s chief economist/head of research Dr Anthony Dass in a thematic report on Malaysia’s economy.

“It would also mean that industrial production which averaged at 38.0% yoy for the first two months of 2Q 2021 may provide some comfort supported by export-led activities.”

Added with the latest PEMULIH stimulus measures amounting to RM150 bil or 10% GDP as well as a low base, the research house expects the 2Q GDP to hover around 11%–13%.

“We reiterate our full-year growth at 4.0%–4.5%,” added AmResearch.

The 2Q 2021 GDP is slated for release on Aug 13 – Aug 3, 2021

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