2 months ago
14 
PETALING JAYA: The imposition of the two-week long conditional movement control order (CMCO) from Oct 14 in Kuala Lumpur, Selangor, Putrajaya and Sabah is expected to dampen the recent economic gains according to CGS-CIMB.
It pointed out that the containment measure disrupts the gradual but uneven recovery in distributive trade.
The distributive trade volume index moderated to -2.4% year on year (yoy) in August compared with -3.9% in July, amid smaller declines in wholesale trade and retail trade, while motor vehicle sales volumes rose 0.9% yoy.
Furthermore, it noted that the gains in retail trade volumes for the month were especially skewed towards stalls and markets with 8.7% growth yoy; non-specialised stores which increased 6.2% yoy, including supermarkets, department stores and convenience stores; food & beverage and tobacco which rose 5.6% year on yearand others up 7.1% year on year.
“The reintroduction of conditional MCO for an initial period from Oct 14 to 28 is likely to reverse recent progress in the segments worst-hit by earlier rounds of restrictions, namely non-retail fuel, household equipment, ICT equipment and cultural and recreation,” it said in a report.
Malaysia’s Industrial Pro-duction Index rose marginally by 0.3% yoy in August from +1.2% yoy in July, supported by a 2.4% on-year increase in manufacturing index, a moderation from a +2.9% y-o-y growth in the previous month.
Meanwhile, OCBC Treasury Research economist Wellian Wiranto opined that the silver lining to the CMCO is that it is unlike the more stringent full-scale MCO implemented in March-April, as broad economic activities are still allowed, albeit with social distancing restrictions in place.
“Factories can still run their productions and malls can still open, for instance,” he said.
Wellian pointed out that official guidelines notwithstanding, Malaysians may shy away from crowds on contagion fears once again anyway, hitting consumer spending.
He stated that as this comes at a time when loan moratorium has expired and households need to service their mortgages and car loans once more, it would add to the pressure on the pace of economic recovery in the fourth quarter.
“This would then allow growth momentum to remain on the broad if gingerly uptick – and let Bank Negara Malaysia hold its Overnight Policy Rate on Nov 3,” he said.
Official guidelines notwithstanding, Malaysians may shy away from crowds on contagion fearsanyway, hitting consumer spending. – AFPPIX
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