AmBank Research expects Malaysia’s GDP to rebound strongly in Q3 2020

by BERNAMA / pic by BLOOMBERG

MALAYSIA’S gross domestic product (GDP) growth is expected to rebound strongly in the third quarter of 2020 (Q3 2020), with a contraction of between -3.5 per cent to -4.5 percent compared to -17.1 per cent year-on-year (y-o-y) in Q2 2020.

AmBank Research in its note today said the full year GDP is expected to hover between -3.6 per cent and -5.5 per cent – factoring in a second wave of the COVID-19 pandemic plus the stimulus measures introduced.

“Much of the downside risk depends on external challenges besides domestic noises,” it said.

According to the research house, industrial production (IP) continued to grow but at a slower pace in August at 0.3 per cent y-o-y from 1.3 per cent y-o-y in July.

It said the IP was largely supported by the manufacturing sector, compensating for the poor production from the mining and electricity sectors.

“Besides, positive news is seen from the distributive trade that fell at a slower pace by 2.3 per cent y-o-y in August from -3.5 per cent y-o-y in July, suggesting a gradual pick up in demand and confidence,” it said.

On month-on-month basis, AmBank Research said that the IP fell for the first time since April this year, falling by 1.2 per cent in August, primarily due to the decline in the mining (-6.9 per cent) and electricity (- 1.2 per cent) sectors, despite the pick-up in the manufacturing sector (+2.4 per cent).

The research house noted that manufacturing production continued to be supported by exports and domestic activities, with electrical and electronic products seen benefiting from the pick-up in global semiconductor sales.

Its performance was also supported by domestic activities such as transport equipment and other manufacturers, food and beverages, tobacco, basic metal, as well as rubber and plastic products.

“Positive news is seen from the distributive trade that fell at a slower pace by 2.3 per cent y-o-y in August from -3.5 per cent y-o-y in July, suggesting gradual pick up in demand and confidence.

“This is reflected by the strong outstanding household loans which grew to 4.8 per cent y-o-y in August from 4.3 per cent y-o-y in July – marking the fastest growth since June 2019,” it added.