Where is Malaysia heading?

Extracted from RHB news release

The country’s leading index which provides an early signal of the direction that the economy is heading dropped by 0. 1 per cent in June ― suggesting that growth in economic activities will likely remain uneven and slow in the months ahead amidst a weaker growth in exports said RHB Research Institute The research house also said that the coincident index which monitors the most recent state of the economy also fell 0. 8 per cent in June due to a drop in industrial production and manufacturing employment.

The leading index tracks among others registration of new companies and approved housing permits both of which contracted 0. 2 and 0. 3 per cent respectively month-on-month.

This was mitigated however by a rise in expected manufacturing sales and money supply which grew 0. 3 and 0. 1 per cent respectively “This suggests that the improvement in economic activities will likely remain uneven and slow in the months ahead amidst a weaker growth in exports compounded by a deepening euro-debt crisis and fading recovery momentum in US ” said RHB

The co-incident index was also dragged down by real contributions to the Employees Provident Fund EPF as well as capacity utilisation in the manufacturing sector which fell by 0. 4 per cent and 0. 1 per cent month-on-month respectively in June

Retail trade volume however increased marginally by 0. 2 per cent during the month.

The gloomy world economic outlook has had analysts predicting that the prime minister would have to call for a general election by the end of the year before the country is hit by the full impact of any crisis as any downturn could affect support in the polls.

Corporate Malaysia meanwhile has had a mixed earnings season with Malaysia Airlines Yeo Hiap Seng JTI Malaysia and MSM reporting either losses or drop in quarterly profits this month. Malaysia Airlines reported its sixth straight quarterly net loss yesterday of RM349 25 million on the back of revenue that fell five per cent to RM3 3 billion. MSM Malaysia Holdings which contributes a significant chunk of Felda Global Ventures Holdings group profit also reported a drop in its second quarter net profit yesterday sinking 31 per cent to RM52 81 million.

Media Prima and Dialog however saw their quarterly profit rise 27 7 per cent and 10 5 per cent to RM56 8 million and RM49 6 million respectively.

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