Malaysia economy news: Since the COVID-19 outbreak, Malaysia banks have been more willing to lend for the first time. This is proven by the improvement of appetite for loans across businesses and households.
With the banking system being the base of Malaysia’s economy, improving lending activities means that the recovery of the economy is well underway. It is considerably better compare to the worst recession since the 1998 financial crisis.
It seems like businesses have once again begun to invest amid a low-interest-rate environment. Moreover, households are also spending on expensive items like properties and cars.
What Bank Negara governor said
According to Datuk Nor Shamsiah Mohd Yunus, Bank Negara governor, business loan disbursements increase to RM206.2 billion in the fourth quarter of 2020. In fact, it has exceeded the 2017-2019 quarterly average of RM196.7 billion. The value of business loan disbursements is lower, which is RM182.4 billion in the previous third quarter.
Disbursements by development financial institutions and banks gradually returned to average levels after MCO, hitting RM73.3 billion in the fourth quarter of 2020. She also mentioned that banks has disbursed over 95% of new loans that were sourced from their own funds, with Bank Negara’s funds for SMEs serving as a supplement.
As for households, loan disbursements hit up to RM99.5 billion in the fourth quarter as compared to RM89.2bil quarterly average in 2017-2019. In the third quarter of 2020, household loan disbursements valued a total of RM99.1 billion.
Private sector’s net financing continued to expand at 4.4% on an annual basis. Besides, the total outstanding loans increased by 3.7% supported by continued growth in the business and household segments.
What SERC executive director said
Lee Heng Guie, Socio-Economic Research Centre (SERC) executive director believes that continuous improvement in lending activities will be unsynchronized across sectors.
“We can see better growth in sectors like electronics and electrical, e-commerce, export-based businesses and other segments of manufacturing. However, sectors that were severely affected by MCO, like tourism would take a longer time to see improvement in lending activities.
Yesterday, Malaysia GDP in the fourth quarter of 2020 shrank by 3.4%, which is greater than the third quarter of 2020, 2.6%.
All economic sectors except manufacturing continued to record negative growth in the fourth quarter of 2020. Construction, mining and quarrying were the most affected sectors with growth contractions of 13.9% and 10.6%, respectively.
In December 2020, the economy shrank by 1.7% y-o-y as compared to 4.7% in October and 4% in November. For the whole year of 2020, the full-year GDP declined by 5.6%, the biggest decline since 7.4% in 1998.
Experts foresee that Malaysia’s gross exports will expand in 2021. The growth rebound of Malaysia’s major trade partners, export orders will support this expectation. Besides, an expected pickup in investment and production activities will also support the growth in 2021.
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