According to the Malaysian Department of Statistics, the country’s leading index (LI) is expected to rise 0.6 percent year on year (y-o-y) to 110.5 points in September 2021, following a contraction of 2.3 percent (109.8 points) in August.
The LI is a forecasting tool that forecasts economic ups and downturns four to six months in advance.
MIDF says the LI’s first expansion in three months indicates Malaysia’s growth prospects will strengthen further in the coming months.
“On a month-to-month basis, the LI rose steadily by +4.0%mom (Aug-21: +1.1%mom), bolstered by a robust growth in real imports of other basic precious & other non-ferrous metals, real imports of semiconductors, the number of new companies registered, and the number of housing units approved during the month,” the research house says.
The improvements in the domestic economic conditions were reflected in the rebound in the coincident index (CI) which recorded an expansion of +0.3%yoy in Sep-21 (Aug-21: -1.6%yoy), underpinned by a sharp rise in the volume index of retail trade.
“Going forward, we anticipate Malaysia’s growth momentum to continue improving as signalled by the recent encouraging readings of the LI. In addition, the economic recovery will be boosted by the further relaxation of the stringent lockdown restrictions, fiscal measures and the easy monetary policy.
“However, the uncertainties surrounding the Covid-19 situation, the soaring commodity prices and the ongoing global supply chain bottlenecks are some of the factors which could derail the economic growth in the near term,” it says.
