AmBank Research: Strong rebound of GDP in Q3

MALAYSIA’S gross domestic product (GDP) growth is expected to rebound strongly in the third quarter of 2020 (Q3 2020), with a contraction of between -3.5% to -4.5% compared to -17.1% year-on-year (y-o-y) in the second quarter.

AmBank Research in its note today said the full year GDP is expected to hover between -3.6% and -5.5%, factoring in a second wave of the Covid-19 pandemic plus the stimulus measures introduced.

“Much of the downside risk depends on external challenges besides domestic noises,” it said.

According to the research house, industrial production (IP) continued to grow but at a slower pace in August at 0.3% y-o-y from 1.3% y-o-y in July.

It stated the IP was largely supported by the manufacturing sector, compensating for the poor production from the mining and electricity sectors.

“Besides, positive news is seen from the distributive trade that fell at a slower pace by 2.3% y-o-y in August from -3.5 per cent y-o-y in July, suggesting a gradual pick up in demand and confidence,” it said.

On month-on-month basis, AmBank Research said that the IP fell for the first time since April this year, falling by 1.2% in August, primarily due to the decline in the mining (-6.9%) and electricity (- 1.2%) sectors, despite the pick-up in the manufacturing sector (+2.4%).

The research house noted that manufacturing production continued to be supported by exports and domestic activities, with electrical and electronic products seen benefiting from the rebound in global semiconductor sales.

Its performance was also supported by domestic activities such as transport equipment and other manufacturers, food and beverages, tobacco, basic metal, as well as rubber and plastic products.

“Positive news is seen from the distributive trade that fell at a slower pace by 2.3% y-o-y in August from -3.5% y-o-y in July, suggesting gradual improvement in demand and confidence.

“This is reflected by the strong outstanding household loans which grew to 4.8% y-o-y in August from 4.3% y-o-y in July – marking the fastest growth since June 2019,” it added. – Oct 13, 2020, Bernama

 

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