Low unemployment rates signals for modest economic recovery

KUCHING: Malaysia’s unemployment rate remained at a low 3.5 per cent, reflecting a moderate recovery in the economy.

The low rate is considered a full employment condition within the country and has stabilised itself as both total labour force and total employment rose to 14.8 and 14.4 million people respectively.

According to the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), what the low rate was reflecting specifically, was an improvement in external trade activities such industrial production and exports and imports.

“Indirectly, the job market will benefit from the improvement in external trade activities. In particular, the manufacturing and mining sector has seen much improvement as the Industrial Production Index (IPI) which saw a 3.5 per cent growth in January, has seen healthy and steady growth since the middle of last year in these sectors.

“Additionally, improving global demand and increases in commodities prices have also allowed for a better performance in the Malaysian external trade since the middle of 2016, as evidenced by the 13.6 and 16.1 per cent growth in Exports and Imports respectively in January,” the research arm explained.

This modest economic recovery is expected to continue on into 2017, supported by overall improvement in global economic activity and domestic spending with further public expenditure.

The manufacturing sector is expected to benefit from the improving global demand whereas the mining sector is set to benefits from the gradual ise in global commodities prices.

Additionally, Midf Research is also expecting development in the US economy to positively spill over to the global economy as well as the Malaysian economy, further supporting their prediction of gradual growth in the economy.

“We remain on course predicting Malaysia to grow at 4.3 per cent in 2017,” concluded the research arm.