PETALING JAYA: Malaysia’s economy will continue to improve, albeit at a gradual pace, towards the end of the year and into 2021, after seeing a stronger-than-expected rebound in the third quarter.
Economists said the gradual resumption of economic activities following the easing of the movement control order, as well as recovery in international trade, would help support the country’s recovery path.AmBank Group chief economist Anthony Dass noted that the improved third quarter gross domestic product (GDP) performance, reflected by a smaller contraction, was partly due to the relaxation of restrictive health measures to contain the spread of Covid-19.
“At the same time, the RM305bil stimulus measures have provided a positive impetus to the improvement of the economy.
“The stimulus measures have boosted consumer confidence, resulting in a pick-up in demand supported by pent-up demand.
“Businesses, too, have benefited from improved orders and backlog orders, ” he said.
The country’s GDP contracted 2.7% in the third quarter, better than the consensus expectation of a 3.7% contraction. This also represented a strong rebound from the 17.1% plunge in the second quarter.
OCBC Bank economist Wellian Wiranto pointed out that improvements in growth were observed in several key categories such as private consumption, investment activities and exports during the three months to September 2020.
“At a broad level, the momentum bodes well for recovery. In particular, the uptick in export-oriented manufacturing activities should help reinforce the improvement in employment outlook, which would in turn allow private consumption to continue rebounding, ” he said.
However, he said the resurgence of the Covid-19 pandemic on the ground could dent the pace of recovery in the fourth quarter.
“The silver lining is that the bulk of economic activities – including manufacturing facilities – have stayed largely untouched, ” he added.In addition, Rakuten Trade Sdn Bhd vice-president of research Vincent Lau noted that the improved GDP in the third quarter of the year was supported by higher crude palm oil prices, glove exports as well as the government’s economic stimulus packages.
“The six-month loan moratorium, wage subsidy allocations and measures to support businesses and stimulate the economy have encouraged spending.
“To date, the economic stimulus packages rolled out by the government amounts to RM305bil, contributing an estimated 3.7% to 4% to the 2020 GDP, ” he said.