No clear recovery path for Malaysia’s economy: Moody’s Analytics


THE Malaysian economy is slowing down, with no clear path to recovery as the acceleration of global trade has been hindered by the new Delta Variant, according to Moody’s Analytics.

Moody’s Analytics Chief APAC Economist Steve Cochrane said Malaysia has been one of the most volatile economies in the region, as a quarter-on-quarter decline was recorded in the second quarter of this year.

Data has been significantly revised down from its first estimation as pent-up demand following a global economic shutdown as well as a global supply-chain disruption and labour shortages from the pandemic made a huge impact.

“The new caseloads relative to population size are high and rising in Malaysia, while the impact on the APAC economy will be deep for the current third quarter and could extend into a weak fourth quarter if the recent wave is not soon contained,” he said in a report.

Cochrane said fortunately for Malaysia, the rate of vaccination is accelerating quickly as it shifts its supply from Sinovac to Pfizer.

“But vaccination rates on their own don’t provide a complete picture of the remaining risk from Covid-19 as the vaccination rate does not always correlate well to the incidence of the virus or the death rate. There could be many reasons for this, including the efficacy of the vaccine in use, the geographic distribution of the vaccine, or the age cohorts of the population that have, or have not, been vaccinated,” he said.

Meanwhile, Cochrane said exports will continue to be a lifeline to the local economy, as domestic consumption and production remain hobbled.

“Exports from Malaysia may face continued production shortages of autos and electronic products due to labor shortages caused by the spread of coronavirus and the movement control orders that have followed.The support from their high-value export industries will be offset in the near term by a slow turnaround in their travel-dependent industries,” he noted.