KUALA LUMPUR (Feb 10): AmBank Research estimates Malaysia's fourth-quarter (4Q) gross domestic product (GDP) could come in between -3.2% and -3.5%, translating into a full-year 2020 GDP of around 5.5%.

It said despite distributive sales slowly turning better in December 2020, registering a smaller decline of 0.3% year-on-year (y-o-y) compared with November's decline of 1.2% y-o-y, the extension of the Conditional Movement Control order (CMCO) in December continued to limit growth.

"This also meant lesser people came out from their homes and spent in the physical shops. With the CMCO and MCO (Movement Control Order) 2.0 extended into 1Q, we expect consumption to remain subdued for the start of the year.

"Online promotions and purchases have proven to be far from a perfect substitute to offline shopping. This was also reflected by the weakest outstanding household loan growth in 11 months, rising by a lower 3.4% y-o-y from 3.8% y-o-y in November," it said in a note on Wednesday.

Meanwhile, UOB Research opined that Malaysia's economy is poised to reverse course and fall into a deeper decline of 3.8% y-o-y in 4Q of 2020, based on the newly released industrial production and services statistics.

In a separate note, it said this will bring full-year real GDP contraction to 5.7% for 2020.

"All key sectors (except manufacturing) are estimated to post larger declines following the reinstatement of the MCO to contain the spread of Covid-19 infections during the quarter.

"Stricter measures are expected to weigh on overall services sector, except for information & communication, finance & insurance, and government services subsegment," it said.

For 2021, AmBank Research said the domestic outlook will depend on the deployment of vaccines and containment of the pandemic virus spread.

"Meanwhile, the improvement in trade, pickup in domestic activities from the support of the stimulus measures, better business confidence, and consumer sentiment could become the key drivers to the overall economy. On the whole, the GDP should expand around 5.2% to 5.9% during the year," it said.