KUALA LUMPUR, May 11 — Manufacturers in Malaysia let go of some 2,140 workers in March after sales growth hit a three-month low, a financial research institute reported today.
RHB Research Institute said in its report that it expects exports and manufacturing sales growth to continue to slide throughout the year due to a slowdown in economies globally.
This comes after reports that the region is looking at a slump in trade with regional powerhouse China seeing its export growth coming in well below expectations, tumbling to 4.9 per cent in April from 8.9 per cent in March.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) also said yesterday that Malaysia was looking at slower growth as regional economies take a hit from the deterioration of the global economic environment particularly in Europe.
“In line with the slowdown in year-on-year sales, manufacturers retrenched some of their workers in March, in view of the uncertainties in the economy and a more competitive environment,” said RHB in its report.
The report noted that manufacturing sales decelerated to 3.1 per cent year-on-year in March compared with 12.1 per cent in February and 4.1 per cent in January.
It said that March marked the first month of slowdown after two straight months of pick-up, on the back of a slowdown in manufacturing production as well as a contraction in the exports of manufactured goods during the month, as the global economy weakened.
RHB also said that wage pressures were building up even before the implementation of the new minimum wage policy.
Salaries rose sharply to 17.3 per cent year-on-year in March, the highest in two years, after rising to 6.2 per cent in February and even exceeded the previous 20-month high of 14.1 per cent in December,
The implementation of the minimum wage policy announced earlier this month could possibly increase manufacturing unemployment if manufacturers try to boost productivity instead of hiring more workers.
RHB also said that evidence was mounting for the Eurozone to extend and fall into a deeper recession in the second quarter of the year, with manufacturing and services activities mired in deeper contraction in April, while the Eurozone’s unemployment rate rose to an all-time Euro record in March.
ESCAP said yesterday that the Asia-Pacific as a whole was expected to see its growth moderate further to 6.5 per cent in 2012 compared with 7 per cent in 2011 due to a slackening of demand for exports in advanced economies.
The international agency said the world had entered a second stage of the global financial crisis with a sharp deterioration in the economic conditions largely due to the Eurozone debt crisis and the uncertain US economy.
Fears of instability in Europe intensified after anti-austerity figures were voted into power in elections in France and Greece over the weekend, sending markets sharply lower across the globe.
The election results heightened concerns that Greece would reject the German-led European bailout package that also imposed strict austerity measures, paving the way for the break-up of the Eurozone.
ESCAP estimated that a disorderly sovereign debt default in Europe or the breakup of the euro common currency region would result in a new crisis that could lead to a total export loss of US$390 billion (RM1,170 billion) over 2012-2013 and reduce Asia-Pacific growth by 1.3 per cent.
It was also reported that China’s exports to Europe shrank 2.4 per cent in April while exports by the Philippines declined 1.2 per cent.