Malaysia heads into recession as employment growth plunges to an almost 3-year low

In its monthly economic review, The Malaysian Industrial Development Finance Research has stated that the country’s leading economic index has declined further to -4.9 percentmom in March from -0.8 percent in the previous month.

The fall, considered to be the hardest since November 1991, was attributed to the implementation of the first Movement Control Order phase.

“Economic contraction for 2Q20 is largely expected while we opine that there might be a gradual recovery starting 3Q20, depending on Malaysia’s progress in containing the outbreak,” says the research house.

“It would also depend on how the rest of the world particularly our key trading partners are combating the spreading virus as it will affect global demand for our products.The economic stimulus package is anticipated to provide some cushions to the adverse impact resulting from Covid-19,” it added.

MIDF further stated that nation’s export growth is at a 4-month low, total trade fell by -3.8 percent y-o-y in March with exports and imports plunging to contraction of -4.7 percent yoy and -2.7 percent yoy , the lowest since November 2019.

Trade surplus continued to record above RM12 billion for four straight months.

Exports of manufactured goods, which hold circa 85 percent of total export, fell to negative territory of -4.5 percent yoy compared to strong growth of +13.1 percent yoy in the previous month.

Furthermore, the research house further stated that Malaysia’s employment growth in March decelerated to 1.3 percent yoy as compared to 2.1 percent yoy in February while the labour force moderated to 1.8 percent yoy.

This was said to be the lowest recorded since December 2016.

Unemployment increased further to 17.1 percent yoy, resulting in an increase in its jobless rate to 3.9 percent, after 28 months of being below the 3.5 percent mark.

The unemployment rate was also the highest since June 2010. With the movement control order implemented in March, many businesses were out of operation, resulted in higher unemployment

“Moving forward, we foresee unemployment rate to breach the 4% full employment condition in upcoming months. Nevertheless, we opine the job market will slowly recover as the Government starts to open up the economy and the fear surrounding Covid-19 begins to subside,” MIDF Research said.

 

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