MALAYSIA’S gross domestic product (GDP) contracted by 17.1% in 2020 (Q22020), the lowest quarterly performance since the Asian financial crisis in 1998.

The country recorded growth of -11.2% in the fourth quarter of 1998.

The contraction was attributed to the three phases of the movement-control order (MCO) and the negative growth seen across all sectors, except for agriculture among others, chief statistician Dr Mohd Uzir Mahidin said while presenting the data today.

Private consumption fell 18.5%, while gross fixed capital formation contracted by 28.9%.

Exports declined by 21.7% while imports dropped by 19.7%.

In the first half of the year, Malaysia recorded a contraction of 8.3%.

Bank Negara governor Nor Shamsiah Mohd Yunus said the extension of the MCO to early May significantly affected economic activities with only selected industries allowed to operate with restrictions, such as a limited workforce.

Headline inflation stood at -2.6% in the quarter under review due to substantially lower retail fuel prices compared with last year and the tiered electricity tariff rebate. 

“It was always our expectation that growth during the quarter will be weak. This reflects the outcome of the strict domestic containment measures during the quarter that was necessary to contain the pandemic and limit the more prolonged disruption in the economy,” she said.

On the external side, the weaker growth was expected, given the global spread and responses taken by countries to contain the virus.

“Growth contracted across most major and regional economies as nationwide lockdowns and travel restrictions were implemented globally,” she said during the virtual press conference today. 

She added that the reopening of the economy from May 4 is showing signs of recovery and positive momentum is expected to continue going forward. 

For the full-year forecast, Shamsiah said the economy is expected to register a growth of between -3.5% and -5.5%. 

Malaysia also recorded the worst growth performance among its regional peers. 

“The Covid-19 pandemic had a devastating impact on the global economy at varying degrees. These differences in the varying economic effects can be influenced by three key factors,” she said.

These are the degree of domestic containment measures, compliance of Malaysians with government-imposed restrictions and the country’s status as a trading economy. 

Shamsiah said the first two factors led to production constraints and mobility restriction which weighed heavily on the economy.

However, they brought down the number of Covid-19 cases from triple digits to double and single digits, she said. 

“Our trade is about 123% of GDP, so our economy will be inevitably affected by the weak global demand.”

Malaysia also has the second largest tourism share in the region, at about 6% of the economy and international travel restrictions led to a sharp decline in tourist arrivals. – August 14, 2020.