Leading Index growth instils confidence in economy
THE 8.2% annual growth for the country’s Leading Index (LI) in January 2021 has instilled significant confidence that the economy will rise from the severe Covid-19 recession.
Sunway University Business School economist Prof Dr Yeah Kim Leng told The Malaysian Reserve (TMR) yesterday that the leading indicator which points to sustained recovery momentum, is encouraging.
“It lends greater confidence that the economy will emerge from the Covid-19 recession in the second quarter. An uneven recovery is expected as inferred from LI being driven largely by healthcare, transportation and logistics.
“Only when the pandemic subsides will we see domestic consumption rise more strongly to sustain recovery in the retail, hotels, food and beverage, and tourism-related industries,” he said.
SERC Sdn Bhd ED Lee Heng Guie also said the continued increase as indicated in LI is a sign of a more stable economic growth onwards.
“The continued higher LI presages firmer economic growth ahead. Nevertheless, the components that helped lift LI higher were the stock market, while other components concerning real sectors are still growing moderately,” he told TMR.
According to the latest report by the Department of Statistics Malaysia, Malaysia’s LI increased to 110 points in January 2021 from 101.7 points in the same month last year to attain an annual growth of 8.2%.
The increase was supported by the persistent increase in the Bursa Malaysia Industrial Index, which was attributed to the Healthcare Index, and Transportation and Logistic Index.
Correspondingly, the LI showed an increase of 0.7% based on monthly comparison, mainly contributed by expected sales value in the manufacturing sector.
“At the same time, the growth rate of smoothed LI remained above the trend which indicates that Malaysia’s near-term economic prospects remain upbeat, in line with the vaccine rollout.
“Besides that, more eased economic containment measures raise hopes of bringing the economic impacts under control,” chief statistician Datuk Seri Dr Mohd Uzir Mahidin said in a statement yesterday.
The report also states that the Coincident Index (CI) declined by 0.4% to reach 111 points in January 2021 from 111.4 points in the previous month supported by a significant decrease by Real Contributions to Employees Provident Fund (-0.5%).
Similarly, the performance of CI, which reflects the current state of the economy, slowed to an annual growth of -2.2% in January from -1.3% in the preceding month.
The fall in the CI reflects the reimplementation of the Movement Control Order on Jan 13 which had to be done as a strict measure to break the chain of infection and transmission of Covid-19.