Malaysia’s unemployment may reach 3.9 per cent in 2019

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Malaysia’s unemployment may hover around 3.8 per cent to 3.9 per cent in 2019, largely due to the downside risk emanating from the on-going tit-for-tat trade war between the US and China as well as growth slowdown in major economies, analysts observed. – Reuters photo

KUCHING: Malaysia’s unemployment may hover around 3.8 per cent to 3.9 per cent in 2019, analysts project, while others believe that it will only reach 3.5 per cent this year.

According to the Department of Statistics Malaysia, the unemployment rate in April 2019 remained at 3.4 per cent for the two consecutive months.

“During this month, the number of unemployed accounted for 523,300 persons, increased 0.4 per cent as compared to the previous month,” the press release read.

It was also revealed that unemployment rate (seasonally adjusted) in April 2019 remained at 3.4 per cent as compared to the previous month.

“Based on our quick assessment, the unemployment rate should hover around 3.8 per cent to 3.9 per cent in 2019 from 3.3 per cent in 2018,” AmBank Research said in its Economics report.

“And if gross domestic product (GDP) were to slow down by two percentage points (ppts) in 2019, our unemployment rate should rise to 4.2 per cent to 4.4 per cent in 2019.

“Nonetheless, our base case unemployment forecast remains at 3.5 per cent for 2019. Our biggest worry is on youth unemployment.”

The research recapped that in 2018, youth unemployment rose to 11.2 per cent from 10.8 per cent in 2017, mainly due to the mismatch between the skills required for jobs and the level of skills young people have when they leave school.

It also noted that the mismatch trend risks rising if not addressed quickly.

Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) forecast Malaysia’s unemployment rate to reach 3.5 per cent this year, up from 3.3 per cent recorded in 2018.

Kenanga Research explained that this was largely due to the downside risk emanating from the on-going tit-for-tat trade war between the US and China as well as growth slowdown in major economies.

“The heightened risk in the external sector is expected to weigh on manufacturing output and together with an expected slowdown in domestic demand may result in slower growth in job creation in the second half of 2019 (2H19).

“The higher unemployment rate is also reflective of a slower GDP growth projection of 4.5 per cent in 2019 (4.7 per cent in 2018),” the research arm said.