Economic research

Center for Socio-Economic Research: Indicators Show Malaysia’s Economy Has Bottomed Out, Though Uneven Across Sectors | Malaysia

The SERC found that Malaysia’s leading index (LI) returned to positive growth territory for the second consecutive month in October 2021 and remained positive on the long-term trend. — Photo by Yusof Mat Isa

KUALA LUMPUR, 4th January – The Executive Director of the Socio-Economic Research Center (SERC), Lee Heng Guie, said today that major economic indicators including gross exports, industrial production, wholesale trade sales and retail, demand for loans from banks, etc., showed that the economy has bottomed out, but unevenly across sectors.

According to Lee, he said the SERC found that Malaysia’s leading index (LI) returned to positive growth territory for the second consecutive month in October 2021 and remained positive on the long-term trend, anticipating increases. more promising prospects in the short term (four to six months ahead) if a gradual normalization of economic activities persists.

The SERC also found that the Industrial Production Index (IPI) rose 5.5% year-on-year in October 2021 and 2.5% in September after two consecutive months of contraction, supported by the strong comeback of the manufacturing sector, especially export-oriented industries.

“Nationally oriented industries continued to operate unevenly while the mining sector remained a drag,” he said.

For wholesale and retail trade, these made a comeback in October 2021 given the almost complete reopening of economic and social sectors, he said.

Lee added that according to the Consumer Sentiment Index (CSI) of the Malaysian Institute of Economic Research (MIER), he also recorded 101.7 points in its latest survey in the third quarter, marking the first return to above the optimism threshold since the third quarter of 2018.

“Gross exports continued their strength throughout the first eleven months of 2021, registering a cumulative growth of 25.7% year-on-year,” he said.

According to the SERC findings, exports of electrical and electronic products remained the largest component (36.4% of the total), grew by 16.1%, and other significant contributors included manufactured goods. metal (+72.5%), rubber products (+57.7%). percent), petroleum products (+57.4 percent), palm oil and palm products (+45.8 percent), chemicals and chemicals (+39.6 percent), and machinery, equipment and parts (+24.5 percent),” he said.

The SERC also learned that the unemployment rate also saw an improvement, where it rose to 4.3% (or 705,000 unemployed) in October 2021, its best level since March 2020, but still relatively higher compared to about 3.3% (about 520,000 unemployed) before the pandemic, Lee said.

“The headline ‘unemployment rate is improving’, indicated time-related underemployment (those who were employed less than 30 hours per week due to the nature of their work or due to insufficient work and who were able and willing to work overtime) increased to 2.1% in the third quarter of 2021, from 1.1% in the fourth quarter of 2019.

“Skill-related underemployment (those with higher education and working in semi-skilled and low-skilled occupations) also increased to 37.7% (from 34.8%) during the period. corresponding,” he said.

Also an economic indicator, banking system loan growth has accelerated for three consecutive months to 4.3% year-on-year in November 2021, supported by higher disbursements, although repayments have also increased gradually.

“Household loans increased due to higher disbursement in almost all areas, while the increase in business loans was supported by higher demand for working capital.

“Inflationary pressures are building up. Headline inflation, as measured by the consumer price index, rose steadily to 3.3% in November 2021, marking four months of continuous rise from 2.0% in August.

“In addition to continued double-digit increases in transport prices, food and non-alcoholic beverage prices rose (2.7% in November 2021, the highest since March 2018),” he said.

He added that among the significant increases in food prices were fresh meat and fish, eggs, oils and fresh vegetables. Prices for financial services, housing, water, electricity, gas and other fuels as well as furniture and furnishings have also risen substantially.

“Overall, we estimate inflation will rise 3.0% in 2022, higher than the 2.5% estimated in 2021,” Lee said.

The Producer Price Index (PPI) has risen continuously for 10 consecutive months with eight months of double-digit growth in November 2021.

He pointed out that the main increases came from raw materials destined for further processing (33.4% year-on-year in November; 31.2% from January to November 2021) as well as intermediate materials, supplies and components (12.1 % in November; 7.6% from January to November 2021).

“Given rising raw material costs and continued supply disruptions, the PPI increase is expected to continue into 2022, at least in the first half.

“The cost pass-through effect is putting upward pressure on consumer inflation,” he said.