Friday 29 Mar 2024
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KUALA LUMPUR (July 23): The Leading Index (LI) grew 0.6% in May 2020, rebounding from a fall of 5.7% in April 2020, according to data from the Department of Statistics Malaysia (DOSM). 

This is the first growth since February, when there was a drop of 1.7% year-on-year. The LI was also down 3.7% in March — the largest drop since November 1991 following a two-week movement restriction.

The rebound in LI shows signs of the economy picking up, as the index is a combination of the selected economic indicators that provide advance signals in economic direction, economists say.

The LI rose further to 4.9% month-on-month in May 2020 from 0.2% in April 2020. 

DOSM noted that five out of seven LI components contributed to the increase with the number of new companies registered (1.8%) as the largest contributor. 

“Year-on-year, the LI grew 0.6% in the reference month, rebounding from a fall of 5.7% in April 2020. The improvement is in line as business activities reopened under the Conditional Movement Control Order (CMCO) starting from May 4, 2020 after economic activities 'froze' in the previous month,” DOSM said in a statement. 

“The implementation of the stimulus packages and the short-term economic recovery plan to cushion the Covid-19 impact [is] expected to alleviate the economic downturn and economy is gradually picking up in the months ahead,” it added.

DOSM also noted that the Coincident Index (CI) — which reflects the overall current economic condition — rebounded to 10.6% month-on-month as compared to negative 15.6% in April 2020. 

“The growth was driven by the significant increase in Volume Index of Retail Trade (5.1%). On a yearly basis, the CI improved to negative 11.1% from negative 19.3% in a month before. In May 2020, majority of businesses were allowed to resume operation subject to strict conditions and new norms,” DOSM said. 

“The Diffusion Index is also used as additional information in determining the peak and trough in economic cycles. The Diffusion Index for LI indicated an improvement in May 2020 to register 42.9% as against 14.3% in April 2020,” it added. 

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