KUALA LUMPUR – The increase in Malaysia’s Leading Index (LI) is optimistic for the country’s near term-growth momentum, MIDF Research said.

The LI seen a growth of 2.1% year-on-year (y-o-y) in December 2021 compared to 1.6% in November 2021, the highest rate since May 2021, the research company elaborated and added that the improvement was contributed mainly to the increase number of housing units approved.

The rise in LI is an indicator of the direction the economy is heading.

“Compared to the previous month, the LI rose further although at a slower pace of 0.6 per cent month-on-month (m-o-m) after gaining 1.6% m-o-m in November 2021.

“On the other hand, the coincident index (CI) which measures the overall economic performance, eased to 2.2% y-o-y (November 2021: 3 per cent y-o-y), in view of the recent resurgence in Omicron-led COVID-19 infections,” it said in a note this week.

The Department of Statistics Malaysia (DOSM) recently released the country’s LI performance, showing a positive trend in December 2021 where it rose by 2.1% to 111.5 points from 109.2 points in the previous year.

It points towards an optimistic economic outlook in the coming months despite the surge in COVID-19 cases, it added.

This month’s CI declined by 0.3% m-o-m despite the increase of 0.9% m-o-m in the previous month.

This was the first reduction since July 2021 that happened during the decline in capacity utilisation in the manufacturing sector.

“In spite of the latest record-breaking daily local COVID-19 cases, we anticipate the increased number of vaccination, including the booster, shots will prompt the authorities to not reimpose any stringent restrictions which would derail the economic recovery process.

“However, the Ukraine invasion poses a downside risk of a prolonged supply bottleneck which could affect Malaysia’s export performance and manufacturing outlook,” MIDF said.

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