Connect with us

Economy

Malaysia's economy suffers smaller contraction, central bank provides rosier 2021 outlook – TheChronicleHerald.ca

Published

 on


By Joseph Sipalan and Rozanna Latiff

KUALA LUMPUR (Reuters) – Malaysia’s central bank provided a rosier growth outlook for 2021 after the economy suffered a smaller contraction in the third quarter, but said it would continue to help households and businesses withstand the fallout of the COVID-19 pandemic.

Gross domestic product fell 2.7% in July-September, smaller than the 3.2% decline forecast in a Reuters poll and showing a marked improvement on the 17.1% slump in the second quarter.

The trade-reliant economy recovered from its first contraction since the 2009 financial crisis after the government began gradually easing curbs to contain the virus in May.

The central bank said 125 basis points worth of rate cuts this year would support 2021 growth, but that it would continue to make “policy support and assistance” available.

“Going into 2021, growth is expected to recover, benefiting from the improvement in global demand and a turnaround in public and private sector expenditure amid various policy support,” said Bank Negara Malaysia (BNM) Governor Nor Shamsiah Mohd Yunus at a virtual news conference.

“Future monetary policy considerations will continue to be guided by evolving conditions.”

Private consumption eased 2.6% in the third quarter from a year earlier after a 5.6% decline in the previous three months, the central bank said, while manufacturing grew 3.3% after a 18.3% drop in the second quarter. Gross exports jumped 4.4% in the July-September period after a 15.1% fall.

The BNM also revised its 2021 projections, raising the midpoint growth forecast to 7% from an earlier average of 6.75%.

Barclays said it expected the central bank to leave rates unchanged throughout 2021, with a low risk of a 25 basis point cut.

While some economists worried that the reimposition of coronavirus restrictions in October would dampen the recovery in Malaysia in the last three months of the year, the central bank said the risks to global growth from COVID-19 had eased.

“The risk to growth from these resurgences is not expected to be as severe as the magnitude of contractions observed in the second quarter,” Nor Shamsiah added.

Analysts at Capital Economics said Malaysia’s outlook was dependent on how well the government managed to contain the spread of the coronavirus. Total infections tripled to over 43,000 cases since a fresh outbreak in September.

“If Malaysia is able contain the second wave, as others in the region have been successful in doing, the economic impact should be relatively small,” Alex Holmes, Asia economist at Capital Economics said.

($1 = 4.1320 ringgit)

(Editing by Ana Nicolaci da Costa)

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Canadian retail sales slide in April, May as COVID-19 shutdown bites

Published

 on

december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

Continue Reading

Economy

Canadian dollar notches a 6-day high

Published

 on

Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

Continue Reading

Economy

Toronto Stock Exchange higher at open as energy stocks gain

Published

 on

Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

Continue Reading

Trending