According to Bank Negara statistics, saving deposits rose to RM211.69bil in November of last year from RM168.33bil in November 2019, a rise that has been much stronger than in recent years.
PETALING JAYA: Total saving deposits, which rose strongly last year due to cautious spending habits brought upon by the global Covid-19 pandemic, may not rise as strongly in 2021 should there be a rebound in the economy.
According to Bank Negara statistics, saving deposits rose to RM211.69bil in November of last year from RM168.33bil in November 2019, a rise that has been much stronger than in recent years.
Alliance Bank chief economist Manokaran Mottain (pic below) said deposits last year were driven by cautious sentiment and economic uncertainty from the Covid-19 pandemic.
“Last year, there was the loan moratorium so the people could save more. This year, if there isn’t one and the people may not be saving much.”
With the intention of reducing non-performing loans induced by job losses and salary reductions, the government announced a blanket loan repayment moratorium for six months from April to September under the Prihatin rakyat economic stimulus package.
Sunway University professor of economics Yeah Kim Leng (pic below) said a pick-up in the economy this year would naturally result in less savings and more spending.
He said savings would be affected by many individuals who have been jobless going into 2021.
“Many received salary cuts or completely lost their income. This would mean weaker savings, which could also have an impact on economic growth.”
Malaysia’s unemployment rate rose to a high of 5.3% in May last year and moderated to 4.6% by September, only to start rising to 4.7% in October and 4.8% in November.
Yeah also said savings rose significantly last year as many were forced to work from home, thus limiting their spending habits.“The lockdowns and increased economic uncertainty saw a lot of people spending less. The rational response was to increase their precautionary savings.
“The projected economic recovery will also see a pent-up demand from last year, ” he said, adding that the various incentives announced by the government, especially those under Budget 2021, would boost spending.
Yeah said the economy has been projected to grow between 6.5% and 7.5% this year.
“Even if it grows just below 6%, it would mean a decent recovery because of the low base effect from last year.”
He added that the reimplementation of the movement control order (MCO) would likely result in a short-term-blip in the country’s economic recovery.
“With the MCO 2.0, the recovery will likely be delayed.
“As a result, we see depressed demand and negative gross domestic product growth for the first quarter of this year.
“We expect Malaysia to emerge from the recession from the second quarter, ” he said.
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