MALAYSIA‘s economy is expected to face external headway this year, particularly from the Covid-19 pandemic that has disrupted business when the government introduced the Movement Control Order (MCO).
In a research note today, Malacca Securities Sdn Bhd said due to the situation, it reckoned that business activities may not see an immediate recovery.
“Although the Malaysian government has laid out a massive stimulus package aimed to cushion the the slowdown of the economy, this will come at an expense of higher budget deficit beyond the target to -3.2% level for the year.
“In the meantime, economic activities may also take a period to recover to their norm, should the aforementioned pandemic were to be contained,” it said.
Moving into 2020, it said the government forecasted a growth domestic product (GDP) growth of between -2.0 to +0.5% year-on-year (y-o-y) for the year.
“The country’s economic conditions, however, is expected to improve only from the second half this year, according to the latest consensus forecast, mostly supported by the impact of economic stimulus measures that revolves around the cash relief and loan moratorium for households and small and medium enterprises (SMEs), monetary easing measures and higher government infrastructure spending.
“The consensus estimate, however, is more promising, tipping the Malaysian economic growth to expand at +3.6% y-o-y as the severity of Covid-19 pandemic is more prominent in European countries and the United States,” it said.
Meanwhile, the research firm expected the local market to remain volatile as a feature over the near term.
“We see this trend to linger over time as market sentiment is generally on downbeat, albeit there were signs of recovery. Market players will continue to adopt the hit-and-run approach, particularly on any new developments on Covid-19.
“Should the aforementioned event dialled down, the focus could turn towards the US-China trade developments once again,” it said. – April 13, 2020, Bernama
