Largest drop in LI indicates that the Malaysian economy will be facing a sharp slowdown
The Leading Index (LI) is compiled to anticipate the peak and trough (turning points) in the economic activity in the short term. The LI in March 2020 recorded the largest monthly drop since November 1991 following a 2-week movement restriction. The LI declined further to negative 4.9 per cent in March 2020 from negative 0.8 per cent in the previous month. The decreased were mainly attributed by Expected Sales Value in Manufacturing sector (-1.7%) and Number of New Companies Registered (-1.6%) which significantly caused the deterioration. Concurrently, the annual change of LI recorded negative 3.6 per cent in March 2020 as against 1.7 per cent in February 2020. The sharp drop in the LI reflects the shutting down in non-essential business activities following the unprecedented restrictions to curb the global pandemic. Thus, it is expected that the Malaysian economy will be facing a sharp slowdown in the near future.
The Coincident Index (CI), a measurement of current economic activity also declined in March 2020. The CI monthly change posted negative 6.9 per cent in the reference month as against 0.7 per cent in February 2020. All CI components recorded negative growth led by Volume Index of Retail Trade (-2.7%). The annual change of CI slowed to negative 3.6 per cent from 3.4 per cent recorded in the last month.
The Diffusion Indexes which measure the improvements of LI and CI components are used to determine the turning points in the business cycles. Both Diffusion Indexes showed downward trends in March 2020. The Diffusion Index for LI fell to 14.3 per cent while the Diffusion Index for CI at 50.0 per cent.
DATO' SRI DR. MOHD UZIR MAHIDIN
CHIEF STATISTICIAN MALAYSIA
DEPARTMENT OF STATISTICS MALAYSIA
22 May 2020
Mohd Yusrizal Ab Razak
Public Relation Officer
Strategic Communication and International Division
Department of Statistics, Malaysia
Tel : +603-8885 7942
Fax : +603-8888 9248
E-mail : yusrizal.razak[at]dosm.gov.my