Weekly Economic Review 

• Ministry of Finance Malaysia (MOF) had released its 68th LAKSANA report
• Malaysian government decided to raise the debt ceiling to 65% of GDP
• The FBM KLCI fell by 1.74% or 27.46 points for the week to settle at 1,548.51 points
• US headline inflation rose by 5.3% yoy in August
• US industrial production (IP) rose by 0.4% mom in August
• The euro area annual inflation rate accelerated to 3.0% in August 2021, a 10- year high
• UK headline inflation soared to 3.2% in August
• China’s retail sales rose 2.5% yoy in August
• New Zealand GDP grew by 2.8% qoq in the 2Q21; +17.4% yoy
• Singapore's total trade rose by 19.8% in August 2021
• Indonesia's exports were valued at USD21.42bn, up 64.1% yoy
• Georgia central bank kept the policy rate unchanged
• Week Ahead Economic Review

MALAYSIA ECONOMY

According to the Ministry of Finance Malaysia (MOF) 68th LAKSANA report, under technical and digital adoption for SMEs and mid-tier companies (MTC) program, a total of RM82.9m has been distributed to 13,884 recipients. Under the CENDANA initiative, a total of RM5.33 million has been disbursed to 539 recipients to encourage local artists. Besides, a total of RM1,024.29m had been channeled based on 2,769,382 claims to the front-liners as allowance. The disbursed amount of wage subsidy 1.0 and 2.0 schemes stood at RM12.936bn and RM1.373bn. For wage subsidy 3.0 and 4.0, a totaled RM1,051bn and RM382.37 were channeled to the employers as of 29 August 2021.

According to the Ministry of Finance (MOF), Malaysia’s cabinet has decided to table amendments to the Provisional Measures for Government Financing (Coronavirus Disease 2019) Act [KWC Act] in the upcoming parliamentary session in October 2021. The proposal is to increase the statutory limit of Federal Government debt from 60% to 65% of GDP in addition to increasing the ceiling limit of the COVID-19 Fund from RM65bn to RM110bn. The decision was deemed as crucial to the government to strengthen the public health system, improving social aid measures, and revitalizing businesses. The raising of the debt ceiling will be the second time in a decade since the rate was raised to 60% last year. Increasing debt ceiling measures also will allow greater fiscal space for the government to maneuver the fiscal spending in the upcoming budget. As of end-June 2021, Malaysia’s external debt amounted to RM1,020.7bn, or 68.5% of GDP, while government debt stood at RM958.4m or 61.2% of GDP. Government statutory debt stood at RM890.7bn or 56.8% of GDP. The Malaysian government is believed to continue providing financial supports for households while focusing on revitalizing the SMEs segment in the reopening phase through existing supports and the upcoming budget. Based on the statement, MOF also instructed banks to consider waiving interest payments on the moratorium provided under the PEMULIH stimulus package. MOF reaffirmed that Malaysian’s economy would grow at a range of 3.0% to 4.0% for the year 2021, in line with central bank projection.

Source: BIMB Securities Research - 20 Sept 2021