Page 36 - Bank-Muamalat-AR2020

34 BANK MUAMALAT MALAYSIA BERHAD About Us Our Leadership Our Strategy
About Us
ANNUAL REPORT FY2020

INDUSTRY AND
MARKET OVERVIEW

GLOBAL momentum in the second half of 2020. However, governments
will have to consider providing more fiscal stimulus to ensure
2020 Review economic activities continue to pick up. In the United States,
there are growing expectations for a new government stimulus
The Year 2020 brought a barrage of unforeseen challenges. package because the labour market recovery has weakened,
Global economies reeled from the unprecedented impact of raising concern over sustainability of growth for personal
the Novel Coronavirus (“COVID-19”) pandemic. Lockdown consumption expenditures. The US Federal Reserve is expected
measures that were imposed globally brought key economic to keep its low interest rate policy through the next few years
sectors, to a near-standstill while national healthcare systems and will allow inflation to go higher so that the recovery in
were pushed to their limits. Economic volatility was further the labour market and the economy will be more entrenched.
exacerbated by an oil price war which saw Brent crude price The European Central Bank also reiterated its readiness to
sliding to USD9.12 per barrel in April 2020. In addition, provide more monetary stimulus should pandemic resurgences
political conflict in several major countries led to further derail the region’s economic recovery. Countries that continue
uncertainties.
to struggle with the pandemic are expected to maintain an
In essence, the global economy was climbing out from the expansionary policy stance to cushion the impact of the ongoing
depths to which it had plummeted during the lockdowns health crisis on the real economy.
and movement restriction periods to contain the COVID-19 Central banks in certain countries will start to normalise its
pandemic in April 2020. However, as the pandemic continues policy interest rates to address the gradual rise in inflationary
to spread, many countries have slowed re-opening their pressures while keeping an accommodative stance to sustain
borders and some are re-instating partial lockdowns to protect economic recovery. Maintaining interest rates at low levels for
susceptible populations. While recovery in China has been too long may spur the risk of overheating an economy due to the
faster than expected, the global economy’s long ascent back to abundant liquidity. This could create the risk of an asset bubble
pre-pandemic levels of activity remains prone to setbacks.
and rapid growth in indebtedness. Pursuant to that, some major
Global economic growth contraction for 2020 is estimated at central banks such as the People’s Bank of China is expected to
-3.5% year-on-year (“y-o-y”), i.e. 0.9 percentage points higher address these emerging risks to avoid another potential crisis in
than projected in the previous International Monetary the future.
Fund (“IMF”) forecast, reflecting a stronger-than-expected
Global Real GDP
(%, change)
US Eurozone Germany
Major
World 1.7 5.5 1.7 4.3 2.3 5.1 1.2 4.2 0.6 3.5
Output -3.5 Advanced -4.9 -3.5 -6.8 -5.4
Economies

2019 2020 2021:P 2019 2020 2021:P 2019 2020 2021:P 2019 2020 2021:P 2019 2020 2021:P

France Italy Spain Japan UK Canada
1.3 -9.0 5.5 0.3 -9.2 3.0 2.0 -11.1 5.9 0.7 -4.8 3.1 1.4 -10.0 4.5 1.6 -5.5 3.6

2019 2020 2021:P 2019 2020 2021:P 2019 2020 2021:P 2019 2020 2021:P 2019 2020 2021:P 2019 2020 2021:P