• World Bank lowered the GDP growth for Malaysia by 0.7ppts to 6% in 2021.
• Malaysia’s CPI increased marginally by 0.1% yoy in February compared to -0.2% yoy in the previous month.
• US GDP grew 4.3% qoq in 4Q20. For year 2020, the annual GDP contracted by 3.5%.
• In March, US composite PMI expanded slower at 59.1 compared to 59.5 in February, resulting in a first quarter average of 59.1.
• China, Thailand, Philippines and Switzerland decided to maintain the interest rates.

MALAYSIA ECONOMY

• Last week, the World Bank lowered its gross domestic product (GDP) growth projection for Malaysia by 0.7 ppts to 6% in 2021, according to its latest report Economic Update for East Asia and the Pacific — Uneven Recovery. The downgraded took into account the recent resurgence of COVID-19 cases, political uncertainty and slower vaccination in advanced economies elsewhere. Meanwhile, the World Bank raised a concern about the government's ability to provide fiscal support moving forward. The World Bank also pointed out that Malaysia may face limited fiscal space to further support the economy due to high public debt and low revenues. Since the pandemic in March 2020, the government has injected RM340bn into the economy through a series of stimulus packages. As a result, the national debt ratio stood at 54% of GDP, reaching the statutory debt limit of 60%. On the other hand, the World Bank stated that the economic performance across countries continues to depend primarily on (i) the efficiency with which the virus is contained; (ii) the ability to take advantage of the revival in international goods trade; and (iii) the capacity of governments to provide fiscal and monetary support. Overall, Malaysia economy is expected to rebound conditional on the successful rollout of vaccines and the ability to inoculate enough people to control risks to public health and the economy.

• Malaysia’s CPI increased marginally by 0.1% yoy in February compared to -0.2% yoy in the previous month. This was the first inflation registered, marked the ending of the eleventh straight month of deflation since March 2020. The increased in the CPI was mainly due to higher prices of fuel, selected food items, alcoholic beverages, and furnishing & household equipment amid the ongoing containment measures and electricity bill discounts during the month. On a monthly basis, consumer prices grew at a slower pace of 0.3% in February, after a 1.2% mom rise in January. Non-food price index decreased for the twelfth consecutive month by -0.6% yoy (Jan: -1.1%), while food price index increased by +1.4% yoy (Jan: +1.5%). CPI without fuel, which covers all goods and services except RON95, RON97 and Diesel, increased 0.4% in February (Jan: +0.5%; Dec: -0.1%; Nov: -0.1%). Meanwhile, increased in durable goods price was slightly slower at 1.7% yoy (Jan: +1.9%), while prices of semi- and non-durable goods declined at slower pace of -0.2% yoy and -1.1% yoy respectively (Jan: -0.2% and -2.0%).

Source: BIMB Securities Research - 29 Mar 2021