Malaysia’s economy to further improve in the second quarter – DOSM
27 May 2021
Malaysia’s economy is expected to further improve in the second quarter of 2021 (2Q21) especially on the back of a low base as the economy contracted 17.1 per cent in the second quarter of 2020, based on the performance of several key economic indicators.
“However, the recovery is also highly dependent on the extent to which the infection of COVID-19 could be brought under control and the consequence of Movement Control Order (MCO) 3.0 with tightened standard operating procedures for the economic sectors and social aspects.
“Further to this, the leading index (LI) for March 2021 achieved strong growth at 17.3 per cent, mainly due to the low base effect of March 2020 following a nationwide lockdown and the better performance of LI components,” said the Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin in a statement today in conjunction with the publication of the latest Malaysian Economic Statistics Review (MESR) Vol. 5/2021 by DOSM.
He said taken together the LI performance and the current state of COVID-19 outbreak, it seems that the near term economic prospect is encouraging but prevailing challenges persist.
“Thus, our utmost commitment in easing the current pandemic situation is vital so as to regain the economic momentum in the upcoming months,” he said.
According to Mohd Uzir, Malaysia’s economic situation, gross domestic product (GDP) declined marginally by 0.5 per cent in 1Q21, continuing its recovery from a contraction of 3.4 per cent in the preceding quarter.
“The improvement was supported by the expansion in the manufacturing sector, the rebound of the agriculture sector and the better performance recorded by all economic sectors compared to the last two quarters.
“Malaysia’s economy in this quarter gradually recovered as more economic activities were allowed to operate following MCO 2.0, less stringent than the MCO 1.0 imposed in March 2020,” he added.
He said various stimulus packages introduced also steered the economic recovery and cushioned the potential economic losses of this country.
“Adding to this, the encouraging economic environment during 1Q21 was largely driven by the better performance of key economic indicators in March 2021,” he said.
Mohd Uzir said Malaysia’s current account balance continued to record a surplus registering RM12.3 billion in the 1Q21 compared to RM18.6 billion in the previous quarter, contributed by the positive momentum of the net exports of goods.
Whereas foreign direct investment recorded a higher inflow of RM9.1 billion against RM6.8 billion in the preceding quarter owing to higher inflow in equity and reinvestment of earnings and lower inflow in debt instruments.
Concurrently, direct investment abroad by Malaysian companies has also increased, gaining from the reopening of the global economy, posting RM7.8 billion in 1Q21 from RM5.2 billion in the preceding quarter due to the high investment in equity abroad and retained earnings in this quarter, he added.
He said meanwhile, Malaysia’s trade continued to rise, with total trade recording a double-digit increase of 14.8 per cent year-on-year (y-o-y).
“In line with this, Malaysia’s trade balance remained surplus at RM58.6 billion,” he said.
In terms of the labour market, Mohd Uzir said amid targeted measures to manage the COVID- 19 pandemic in the country, uneven recovery momentum in the labour market was observed as the number of employed persons decreased slightly y-o-y by 0.04 per cent to 15.24 million persons while the unemployment rate remained high above four per cent registering 4.8 per cent in the 1Q21.
“From the view point of labour demand, the number of jobs in the economic sector decreased marginally as filled jobs declined while vacancies posted a small increase.
“Overall, the labour market remains in a challenging situation as it has not returned to the way it was during pre-COVID times,” he said.