July 7, 2020 House of Trust

Weekly Economic Update (Week 1 of January 2020)

A. Malaysian Economy 

Malaysian Well-Being Index 2018 (MyWI) (published on 24th Dec 2019)  (Source: DOSM)

  • MyWI increased 0.8 per cent to 122.4 index points in 2018 as compared to 2017. 
  • Economic and social well-being sub-composites grew 0.7 per cent and 1.0 per cent respectively in 2018. 
  • Under these 2 major sub-composites, most indices showed an increase from 2017 to 2018 including transport, income and distribution, education, working life, leisure, public safety, social participation, housing, culture, environment and family
  • Communications index fell 0.2 per cent, health fell 0.6 per cent and governance fell a worrying 2.8 per cent.

Source: Department of Statistics Malaysia

Malaysian Economic Indicators: Leading, Coincident & Lagging Indexes (October 2019) (Source: DOSM)

  • Leading Index (LI) which predicts the economic direction of Malaysia shows a better performance in October 2019, expanding 1.4 per cent to reach 120.3 points from 118.6 points in September 2019. 
  • The annual change of LI showed the same trend, rose 1.5 per cent in October 2019 as against 0.3 per cent in the previous month. 
  • Economy is expected to experience a better growth in February to April 2020.
  • Main contributors to increase were Real Imports of Other Basic Precious & Other Non-ferrous Metals (0.9%) and Real Imports of Semi Conductors (0.4%). 
  • Coincident Index (CI) which measures the current economic performance, surged 0.9 per cent in October 2019 as compared to negative 1.2 per cent in September 2019.
  • 1.3 points increased was driven by Capacity Utilisation in Manufacturing sector and Volume Index of Retail Trade which posted 0.4 per cent, respectively. 
Source: Department of Statistics Malaysia

Monetary & Financial Developments in November 2019 (Source: Bank Negara Malaysia)

  • Headline inflation was lower at 0.9% in November. 
  • Core inflation was stable at 1.4%. 
Source: Bank Negara Malaysia
  • The Index of Wholesale and Retail Trade (IOWRT) recorded a slower growth in October (5.2%; September: 6.0%), due to moderation across all segments. 
Source: Bank Negara Malaysia
  • Disbursements in the banking system remained forthcoming to businesses, including to the real estate and primary agriculture sectors. 
  • Slight moderation in household loan disbursements for the purchase of residential property. 
  • The ringgit appreciated by 0.1% against the US dollar in November, driven by non-resident portfolio inflows to the domestic bond market. These inflows led the 10-year MGS yield to decline by 1.2 basis points. 
  • The KLCI declined by 2.3% in line with regional equity markets, partly due to cautious outlook on global trade developments towards the end of November. 
  • Banking system asset quality remains healthy with overall net impaired loans ratio remaining stable at 1.0%. 
Source: Bank Negara Malaysia

B. ASEAN Economy 

ASEAN growth in 2019 slower than forecasted (Source: Asian Development Bank)

  • Southeast Asia has grown less than anticipated, resulting in slight downward revisions to growth forecasts which now stand at 4.8 percent (2019) and 4.9 percent (2020), down from 4.9 percent and 5.0 percent, respectively. (Source: ADB)
  • The region’s more open economies are facing the combined impacts of US-China Trade War and a dip in the electronics cycle, although this has partly been offset by strong domestic demand.
  • Other factors such as rising oil prices, currency depreciation and the uncertainty surrounding Brexit are also important issues surrounding economic growth in ASEAN.
  • Vietnam has been the fastest-growing economy in Southeast Asia this year and growth in the first half of 2019 is estimated at 6.8 percent year-on-year. Growth in industry – especially manufacturing – remained robust and foreign direct investment (FDI) rose by 27 percent in the first five months of 2019 from a year earlier.
  • Although ASEAN economies have remained resilient in the face of current economic challenges, the region has to stay vigilant if it is to operate successfully in an increasingly connected trade and financial system.
Source: The Asean Post

For the PDF version of the update, refer to the attachment below:

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