The LI is a predictive tool used to anticipate economic upturns and downturns in an average of four to six months ahead.

Chief statistician Mohd Uzir Mahidin said the increase was mainly contributed by real imports of other basic precious and other non-ferrous metals, driven by the import of copper-based metals.

However, he noted that the LI declined 2.8% month-on-month (m-o-m), following the reduction in all of the components.

“Looking at the direction indicated by the decreasing growth rate of smoothed LI (despite remaining above the trend), the LI indicates that Malaysia’s near-term economic prospects continue to face challenges.

“This is in line with the international and national agencies’ forecast of a slower economic outlook for Malaysia in 2021,” Uzir said in a statement today.

However, he said the positive impacts from various government initiatives to support business continuity, along with the progress in Covid-19 vaccination rates may boost business confidence, thus supporting economic recovery.

On another note, he said the Coincident Index (CI), which reflects the current economic activity, further decreased by 6.3% m-o-m in June compared to a decrease of 1.3% in May, due to the noticeable decline in capacity utilisation in the manufacturing sector (-4.5%).