Leading index in June slips on-month, economy to grow at slower pace

“However, positive impacts from various government initiatives to support business continuity, along with the progress of Covid-19 vaccination rates may stimulate the business confidence and hence support the economic recovery,” he said.

KUALA LUMPUR: Malaysia’s Leading Index (LI) fell by 2.8% in June from a month ago while the Coincident Index (CI) slowed down further, pointing out to a slower economic growth in the coming months, according to the Statistics Department.

In its report issued on Wednesday, the department said the month-on-month decline was reflected by the reduction in all of LI components mainly the number of housing units approved (-0.9%).

The LI is a predictive tool used to anticipate economic upturns and downturns in an average of four to six months ahead.

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said on a year-on-year basis in June 2021, the LI continued to register a positive growth of 0.5% to 105.6 points from 105.1 points a year ago.

“The increase was mainly contributed by real imports of other basic precious & other non-ferrous metals driven by the import of copper-based metals.

“However, the LI declined 2.8% on-month,” he said, adding that looking at the direction indicated by the decreasing growth rate of smoothed LI despite remaining above the trend, “the LI indicates that Malaysia’s near term economic prospect continues to face challenges”.

“This is in line with the forecasts by international and national agencies that expect a slower economic outlook for Malaysia in 2021.

“However, positive impacts from various government initiatives to support business continuity, along with the progress of Covid-19 vaccination rates may stimulate the business confidence and hence support the economic recovery,” he said.

Since the Covid-19 pandemic was declared in March last year, the government has launched eight stimulus packages worth RM530bil to address the crisis.

The latest package, National People’s Well-Being and Economic Recovery Package (Pemulih), estimated at RM150bil was unveiled on June 28, to further mitigate the economic impact caused by the pandemic.

The CI posted negative 3% in following the implementation of Movement Control Order (MCO) 3.0.

“The performance of CI which reflects the current economic activity further decreased to negative 6.3% month-on-month as against a decline of 1.3% in the preceding month, due to the noticeable decline in capacity utilisation in the manufacturing sector (-4.5%),” he said.

Infographic of the Leading Index and Coincident Index in June.