MALAYSIA’S economy expanded by 3.6% in the fourth quarter of 2019, dragging the full-year gross domestic product (GDP) growth at 4.3%, the lowest since the 2009 financial crisis amid supply disruptions in the commodity sector.

“GDP growth for 2019 would have been higher at 4.7% without the supply disruptions in the commodity sector,” said Bank Negara governor Nor Shamsiah Mohd Yunus.

In 2018, the GDP growth rate was 4.7%.

The Covid-19 outbreak is expected to affect Malaysia’s GDP growth for Q1 2020, depending on how the virus spreads and evolves, Nor Shamsiah said at a press conference today.

Headline inflation was lower at 1% for Q4 2019, pulling the overall 2019 inflation rate at 0.7%.

“If the outbreak could be contained in the very near future, the impact would not be as severe. But what if it was to prolong?”

The outbreak is likely to affect growth through lower arrival of foreign tourists and decreased spending on hotels, retail, transport and restaurants.

She said a number of measures suggested by Bank Negara would be introduced in the Covid-19 stimulus package.

Finance Minister Lim Guan Eng had said the stimulus package would be unveiled in early March at the latest and based on the impact of the virus.

For the year, growth will be supported by household spending, the realisation of approved private investment projects in recent periods and higher public sector capital spending, said Nor Shamsiah.

Nevertheless, there are downside risks to growth, she said.

These include uncertainties in external conditions arising from the ongoing virus outbreak, the various trade negotiations and geopolitical risks, as well as domestic factors, including weaknesses in the commodities sector and delays in project implementation.

Thus, two-way capital flows and exchange rate volatility should be expected.

Headline inflation in 2020 is projected to average higher than in 2019, but remain modest.

The trajectory of headline inflation will be dependent on global oil and commodity price developments and the timing of the lifting of the domestic retail fuel price ceilings.

“Underlying inflation is expected to be broadly stable, reflecting the continued expansion in economic activity and the absence of strong demand pressures,” she said. – Bernama, February 12, 2020.