BNM - Financial Stability Review PDF
BNM - Financial Stability Review PDF
BNM - Financial Stability Review PDF
3 APRIL 2020
1
The global economy is expected to contract in 2020, weighed
by unprecedented measures taken to contain COVID-19
Composite Purchasing Managers’ Indices1
Index
60
▼ The unprecedented containment measures taken by
numerous countries have triggered a concurrent
55 supply and demand shock
40
▼ Prospects for both advanced and emerging economies
are deteriorating as the pandemic escalates
35
PR China Euro Area
30 US Japan
2
Malaysia’s economy will not be spared, affected by both weak
global demand and domestic containment measures
Contribution to Real GDP Growth
Ppt. Contribution
3
Pakej Rangsangan Ekonomi Prihatin Rakyat 2020 will
cushion the impact on households and businesses
+2.8 ppt
▲ Loan moratorium for 6 months
4
The Bank’s priority is to ensure that the financial system
continues to serve the needs of the economy
Relief for Measures to support lending activities by
individuals, SMEs and corporates financial intermediaries
6-month deferment on loans
or financing for individuals and SMEs
Adjustments in
Conversion of credit card Statutory Reserve
balances into term loans/ financing Requirement (SRR)
Facilitate corporates’
requests to defer, restructure Flexibility to draw on capital
or reschedule loans and liquidity buffers
5
The financial system is well positioned to support the
economy, given the strong buffers built up over the years
6
Stress tests affirm resilience of financial system
even under severe economic conditions
Simulated GDP shocks more severe Capital buffers sufficient to absorb potential losses
than past stress events
2008 Global Pre-shock Post-shock
Financial Crisis 1… 1…
Adverse 1… 1
Scenario
2019
CET1Adverse Scenario
capital ratio 2
(banks)
18.3 228
13.2 210
12.3 201
Scenario 2
Minimum regulatory
requirement: 8% Minimum regulatory
requirement: 130%
Scenario 1
Total Capital Ratio, % Capital Adequacy Ratio, %
2019 2020 2021 2022 2023 (Banks) (Insurers)
7
The Bank will ensure uninterrupted financial intermediation
in the environment of heightened financial market volatility
Ample liquidity in the banking system with continuous Domestic financial market remains resilient relative to
support by the Bank via its open market operations regional peers with healthy trading volumes
Ringgit 2 Bond 3 Equity 3
2019 Jan-20 Feb-20 Mar-20
MTD Mar-20 Ringgit Bond Equity
(MYR per USD) (10Y MGS) (FBM KLCI)
Non-Resident Portfolio Flows 12.8 bps
RM billion YTD Change (%)
+11 Average4
Regional Avg. 9.8
bps
+31
-15.5
-5.7
-101 -6.7
Total Liquidity in the System -27.5
-181
RM billion
YTD Avg. Daily Volume
169 2015-2019 Avg.
160 161 13.3 6.4
156 2.4
10.4 2.1
3.9
8
In this environment, Malaysia’s economic growth is
projected to be between -2.0% and +0.5% in 2020
Real GDP Growth
Annual Change (%)
Growth to be weighed by:
Output loss from COVID-19
9
Inflationary pressures remain subdued amid lower global
oil prices and weaker demand
Headline Inflation
3.7 (Annual Change, %) Headline inflation to average between -1.5% to +0.5%
A reflection of an environment of low global oil prices & subdued demand
Subject to uncertainty
1.0
0.7 0.5 Movements in global commodity prices
-1.5
2017 2018 2019 2020f
10
Current account remains in surplus supported by continued
goods surplus, reflective of diversified exports structure
Current account surplus at 1.0% to 2.0% of GDP... …supported by diversified export products and markets
11
Continuation of large-scale infrastructure projects
will provide additional lift to growth
Capital spending for major transport infrastructure
projects of about RM15 billion*
are expected to lift 2020 GDP growth by
+1.0 ppt
Total Size of Selected Projects Under Construction
RM billion
Pan Borneo
MRT2 LRT3 Highway
RM RM RM
30.5 16.6 32.5
billion billion billion
*Expected net spending in 2020 after adjusting for import content. The major transport infrastructure projects include MRT2, LRT3, Pan Borneo Highway, Gemas-JB Double Track, ECRL and Klang Valley Double Track Phase 2.
12
Significant policy support underlines the commitment of
policy makers globally to assist a rebound in growth
8.0
9.3
4.7 5.0
2.1 2.6 2.5 3.5
1.6
2009 2020
1 Estimated stimulus measures for MY. For other economies, 2009 refers to GFC-related discretionary 3Fiscal Stimulus of the Euro Area in 2020 is estimated as an average of Germany, France and Italy
spending while for 2020 refers to announced fiscal measures related to COVID-19. Source: Pakej Rangsangan Ekonomi Prihatin Rakyat 2020, IMF, national authorities, CEIC, news flows
2 US and Japan proposed USD2 tn and USD190 bn in spending, respectively in 2020. and staff estimates
13
The Malaysian economy can weather these
challenges and emerge stronger
14
Thank you
15
Question and Answer Session
16
Additional Information
17
Growth to be anchored by private consumption expenditure
Real GDP by Expenditure
Annual Change (%)
% Share Long-Term
2018 2019p 2020f
(2019p) Average1 Household spending supported
by stimulus measures and
Real GDP 100 4.7 4.3 -2.0 to +0.5 5.1 subdued inflation
Domestic Demand2 94.1 5.5 4.3 1.1 6.4
Private Investment 16.8 4.3 1.5 -9.7 8.9 Investment affected by weak
demand and high uncertainty
Public Consumption 12.2 3.3 2.0 5.9 5.1 • Continued progress of
infrastructure projects to
Public Investment 6.3 -5.0 -10.8 -7.5 -0.2 support investment activity
Net Exports of
7.3 11.4 8.9 -27.0 -1.5
Goods and Services
Weak external demand
Exports 64.0 2.2 -1.1 -13.6 2.1 to affect net exports,
Imports 56.7 1.3 -2.3 -11.9 2.9 despite slower imports
18
Output to decline across all sectors, except for services
Real GDP by Economic Activity
Annual Change (%)
% Share Long-Term
2018 2019p 2020f
(2019p) Average1
Real GDP 100 4.7 4.3 -2.0 to +0.5 5.1 Impact of COVID-19 and MCO on
tourism-related and consumer
services is cushioned by
Services 57.7 6.8 6.1 2.3 6.2 stimulus measures
19
Key assumptions underpinning BNM’s forecasts
Commodity Prices
Brent (USD/barrel) 64 25 to 35
p Preliminary
f Forecast
Source: Bloomberg, MPOB (Malaysian Palm Oil Board), Department of Statistics, Malaysia and Bank Negara Malaysia estimates
20