Malaysia’s 4Q 2020 GDP to contract 5.5% on ‘restrictive measures’

PRELIMINARY estimates by AmBank Research suggest that the Malaysian gross domestic product (GDP) for 4Q 2020 will likely hover between -3.2% and -3.5% or weaker than the -2.7% reported in 3Q 2020.

Both the quarterly and whole year GDP will be announced this Thursday (Feb 11).

“This is partly inflicted by selective restrictive measures imposed in the final quarter of last year when the number of new COVID-19 cases picked up,” projected the research house’s chief economist Dr Anthony Dass.

“This should bring the full-year GDP to around -5.5% from 4.3% in 2019.”

Elaborating further, Dass pointed to the performance of industrial production (IP) which has been mixed for during the entire of last year.

“The data showed six months of negative annual growth out of the 12 months mainly due to the impact from the COVID-19 pandemic and the restrictive measures taken to contain the virus spread, ie lockdowns,” he justified.

“Such restrictive measures resulted in disruptions to the global supply chain, demand and employment. On that note, for the full year of 2020, IP contracted by 4.2% year-on-year (yoy) (2019: +2.3% yoy).”

On the issue of unemployment, the research house pointed to the outcome of the restrictive measures in 4Q 2020 following which the number of unemployed people during the quarter came in at 772,900 compared to 737,500 at end-3Q 2020 (end-2Q 2020: 773,200;  end-1Q 2020: 610,500).

“This remains a cause of concern although 22,300 jobs were created in 4Q 2020 from 202,900 in 3Q 2020 (2Q 2020: -242,200; 1Q 2020: -53,600).

According to Dass, unemployment of youths (those age between15 and 30) remains sticky, easing a tad to 8.7% in December from 8.8% in November, while the number of youth unemployed (15 to 24 years old) edged higher to 13.2% in December 2020 (November 2020: 13.0%).

“Taking into account of the IP performance and exports which grew by 5.2% in 4Q 2020, and unemployment at 4.8%, the preliminary GDP estimation for 4Q 2020 would hover between -3.2% and -3.5%,” he rationalised..

“It is near the market consensus of -3.5% (low: -1.0%; high: -7.6%). This should likely bring the full-year 2020 GDP to around -5.5%.” – Feb 9, 2020

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