Malaysia: GDP expanded at a decade-low in Q1 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the latest Q1 GDP figures in Malaysia.

Key Quotes

“The Malaysian economy expanded at the slowest pace in 10 ½ years by 0.7% y/y in 1Q20 (4Q19: +3.6% y/y).”

“Given the extension of the CMCO through May, cumulative losses are estimated to reach MYR98bn or 6.6% of GDP. On that note, we expect real GDP to post a y/y and q/q contraction in 2Q20 (1Q20: +0.7% y/y, -2.0% q/q) which implies a technical recession in 1H20. Economic activity is expected to improve in 2H20 following the relaxation of containment measures globally and domestically as well as the eventual lifting of MCO.”

“We maintain our 2020 GDP estimate of -3.5% for now (BNM’s forecast: -2.0% to +0.5%; 2019: +4.3%), with key downside risks emanating from potential second wave of the virus, cautious spending behaviour, slow resumption of business activity, and supply chain disruptions. The upcoming key event to watch is the government’s short-term economic recovery plan that will be unveiled at end-May.”