KUALA LUMPUR (June 24): Malaysia’s Leading Index (LI), which provides an early signal of the future economic direction, slumped to negative 5.5% in April 2020 from negative 3.6% in March 2020, said the Department of Statistics Malaysia (DOSM).

The main components driving the 5.6-point downward shift were the number of housing units approved and the number of new companies registered.

Considering the weaker performance of the annual LI and the LI growth cycle deviation from the long-term trend, it is anticipated that the economy will remain on the contraction trajectory in the coming months, said chief statistician Datuk Seri Dr Mohd Uzir Mahidin.

Mohd Uzir said an early signal of an economic recession had been shown by the LI since October 2019.

He said the economy began to slow down since then due to global trade tension and the contraction worsened with the outbreak of Covid-19.

The downward trend was confirmed by the Coincident Index (CI), from February 2020, he said.

Mohd Uzir said the CI, which measures the overall current economic performance, posted a sharp drop at negative 15.6% against negative 6.9% in the previous month.

He said year-on-year (y-o-y), the CI slipped to negative 19.3% in April 2020 from negative 3.6% in March 2020.

He said these showed that businesses shut down and demand plunged in April 2020.

“The roll-out of a short-term economic recovery plan, namely Penjana, with the thrust of empowering people, propelling businesses and stimulating the economy, will help to relieve economic pressures despite the challenging economic outlook.

“Thus, short-term and long-term economic measures are seen to foster robust economic revival,” he said.