AmInvesment Bank: Malaysia’s 4Q GDP could fall between 3.0-3.8pc this year

People shop for groceries at a Giant hypermarket in Shah Alam March 17, 2020. — Picture by Meira Zulyana

KUALA LUMPUR, Dec 2 — The Malaysian fourth quarter (4Q) 2020 gross domestic product (GDP) preliminary estimation could fall between the range of 3.0 per cent and 3.8 per cent, partly due to subdued demand, said AmInvestment Bank.

In its Economics Report today, the research house said businesses will experience capacity pressure with backlogs of work reducing that result in a dip in holdings of raw materials and semi-finished goods.

The manufacturing Purchasing Managers Index (PMI) remained in the contraction region for the fourth straight month in November, reading at 48.4 which is marginally lower than October’s 48.5.

The research firm said the performance is somewhat in contrast with the Asean trend which rose to the 50 threshold (which separates expansion from contraction) for the first time since March.

“The poor manufacturing PMI reading in November did not come as a surprise as it was inflicted by the rising Covid-19 cases both locally and and abroad, and the restrictive measures to contain the virus spread.

“These lowered the demand for manufactured goods while supply chains faced challenges to deliver inputs in a timely manner. Thus, businesses scaled back on their production,” it said in the report.

Nonetheless, looking at the past two months’ manufacturing PMI data, the positive side of it is that it did not present a similar sharp drop as witnessed in April which fell to 35.6 due to the restrictive measures.

This could in part be due to the conditional movement control order (CMCO) being more targeted, with less adverse implications on both supply and demand. — Bernama

Source: Malay Mail