The Week Ahead - GDP Malaysia and Singapore


  • Economy
  • Monday, 10 Aug 2020

GDP in the spotlight

MALAYSIA’S gross domestic product (GDP) report for the second quarter will shed some light on the damage the Covid-19 pandemic has inflicted on the country’s economy.

Bank Negara is expected to announce the second quarter GDP on Friday.

ING senior Asia economist Prakash Sakpal forecasts an 8.3% year-on-year contraction – the steepest since the 1998 Asian crisis.

ING thinks markets have almost become indifferent to downside GDP growth surprises from around the region and they are unlikely to be perturbed if Malaysia’s growth numbers follow a similar path.

In addition, ING said that with key drivers of exports and tourism missing, the negative GDP trend will remain for the second half of the year.

With inflation continuing to be negative, the doors remain open for some more monetary easing from the central bank, ING said.

According to IHS Markit estimates, Malaysia’s GDP is expected to shrink in the second quarter by 2.2% on a year-on-year basis.

Chinese data dominates

A BIG slate of economic data from China will get much of the attention this week. The country is expected to announce its July industrial production, fixed investment, retail sales, jobless rate, house price inflation, and monetary and lending indicators this week.

Analysts said industrial production and retail sales data, as well as investment numbers, will be eyed in China to steer estimates of third quarter economic performance.

ING thinks most indicators will post better readings than they did in June, suggesting that the third quarter is off on a firmer start.

IHS Markit said the latest PMI surveys indicated that China’s recovery from the Covid-19 pandemic extended into July, with output and new orders increasing at solid rates.

However, IHS said the survey data also showed a further decline in employment, which could dampen consumption in coming months.

Singapore Q2 GDP

SINGAPORE is expected to announce its final GDP data for the second quarter tomorrow.

The republic’s economy entered a technical recession after shrinking by 41.2% in the second quarter compared to the previous quarter, according to preliminary data from the Ministry of Trade and Industry.

On a year-on-year basis, GDP dived 12.6% versus economists’ forecast of a 10.5% contraction.

A technical recession refers to two straight quarters of contraction.

ING said Singapore’s second quarter GDP might as well go unnoticed despite a likely downward revision from the -12.6% year-on-year first print on the back of weak June manufacturing.

US IPI, retail sales, inflation

ALL eyes will be on the US industrial production and retail sales updates for July to gauge the recovery path heading into the third quarter.

The manufacturing sector has shown initial recovery signs, with production rising 7.2% in June, albeit still some 11.2% below levels of a year ago.

Its retail sales rebounded in June, with consumers upping their spending as businesses and local economies reopened.

Its GDP shrank 9.5% in the second quarter from the first, a drop that equals an annualised pace of 32.9%, according to the Commerce Department’s initial estimate.

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