KUALA LUMPUR (April 2): AmBank Group Research raised its 2021 gross domestic product (GDP) projection to 5.5%-6%, on the back of spillovers from an improving global demand amid a tech upcycle, better business and consumer sentiments, and a gradual return to normalisation set to benefit the manufacturing sector.

The projection is lower than Bank Negara Malaysia's (BNM) forecast of 6%-7.5%. 

In a note today, AmBank chief economist and head of research Dr Anthony Dass said the domestic Manufacturing Purchasing Managers' Index (PMI) was the highest at 49.9 in March since July 2020. 

However, he said the PMI remained under contraction for the eighth consecutive month.

Dass said the improvement in the health of the manufacturing sector was supported by increased orders and supply-side production improvements due to the easing of restrictions.

He noted that an increase in payrolls which catalysed a 2.4% year-on-year (y-o-y) increase in demand for labour in the manufacturing industry was to fulfil a higher magnitude of orders.

He added that a subdued two months for manufacturing exports at -3.8% month-on-month (m-o-m) in February and -3.1% m-o-m in January 2021 were potentially due to a global second wave of Covid-19 at the start of 2021. 

He said the global supply chain disruption also pushed firms' input and output prices to a four-year high.