KUALA LUMPUR- The Malaysian economy should see a less severe slump in the first quarter of 2021 than it did in the previous three months, helped by resilient manufacturing activity and growing external demand, according to economists polled by Reuters.
The economy is seen contracting 1.9 percent in the period of January to March, according to the median estimate of a Reuters poll of 11 economists, an improvement on a 3.4 percent contraction recorded in the fourth quarter of last year.
Malaysia’s economy was propped up by robust growth in the manufacturing sector and sustained oil production, but lockdowns imposed to contain spiking coronavirus cases over the quarter will have hurt consumption, according to Alex Holmes, Asia economist for Capital Economics.
“The outlook has deteriorated again in recent weeks, with a rebound in cases leading to the reimposition of restrictions,” Holmes said in a research note.
“The risks to our annual forecast to growth of 6.5 percent are now weighted firmly to the downside.”
Shipments surged in March by 31 percent year-on-year, the seventh-straight month of growing demand for Malaysia’s exports.
But this week the government imposed movement restrictions in capital city Kuala Lumpur and most parts of surrounding Selangor state, Malaysia’s richest region, to deal with a fresh surge in COVID-19 cases.
Malaysia’s central bank expects the economy to rebound this year with growth of between 6 percent to 7.5 percent. GDP shrank 5.6 percent in 2020 – its worst annual performance since the Asian Financial Crisis.
