MAYBANK Investment Bank Bhd (Maybank IB) expects the third and fourth quarter of this year’s real gross domestic product (GDP) to contract by -3.5% year-on-year (yoy) and -1.9% yoy, respectively after the economy shrank in the second quarter.
This would give a full-year recession of -5.4%, the research house said in a note today.
Maybank IB said consumer spending indicators in the third quarter 2020 (3Q20) have improved, indicating a relatively better real private consumption in the quarter.
It said both household loan applications and approvals as well as domestic credit card transactions have rebounded in 3Q20.
“The acceleration in household loans growth in the three months up to September 2020 reflect the impact of stamp duty, Real Property Gains Tax and sales tax exemptions under the short-term economic recovery package the National Economic Recovery Plan (PENJANA) to spur home and auto sales over the following 6-18 months.
“Hence, the pick-up in loans for purchases of residential property and for purchases of passenger vehicles,” it said.
Maybank IB said a risk to the forecast, especially the fourth quarter 2020, is the new wave of surge in COVID-19 cases since late-September 2020 that led to the imposition of targeted lockdowns.
“This include the conditional movement control order (CMCO) currently enforced over the combined period of Oct 13 to Nov 13, 2020 in the states of Sabah and Selangor and the Federal Territories of Kuala Lumpur, Putrajaya and Labuan which makes up 47% of the country’s GDP,” it added. – Nov 2, 2020
