THE country’s economy recorded a contraction of 0.5% in the first quarter of 2021, a sign of recovery from a decrease of 3.4% in the preceding quarter, with improvement seen in all economic sectors.

In the first quarter of 2020, Malaysia recorded a gross domestic product (GDP) growth of 0.7%.

All economic sectors recorded improvement during this 2021 quarter led by manufacturing, Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said today.

The manufacturing sector grew stronger at 6.6% in the first quarter of 2021 compared to 3% in the fourth quarter of 2020, while the services sector decreased 2.3% during the quarter. Hover, it is better than the decline of 4.8% in the fourth quarter of 2020.

The agriculture sector grew marginally by 0.4%, mining and quarrying improved to a negative 5% and the construction sector decreased 0.4%.

Despite the third round of the movement-control order (MCO), Nor Shamsiah said Malaysia’s GDP growth is likely to remain in the range of 6% to 7.5% in 2021.

“MCO 3.0 will be similar with MCO2.0, with most economic sectors (remaining) open,” she said.

Despite the recent re-imposition of containment measures, she said the impact on growth is expected to be less severe than that experienced in 2020, as almost all economic sectors are allowed to operate.

“Overall, the growth recovery will benefit from better global demand, increased public and private sector expenditure as well as continued policy support. This will also be reflected in the recovery in labour market conditions, especially in the gradual improvement in hiring activity.

“Higher production from existing and new manufacturing facilities, particularly in the E&E and primary-related sub-sectors, as well as oil and gas facilities will provide a further impetus to growth.

“The rollout of the domestic Covid-19 vaccine programme will also lift sentiments and contribute towards recovery in economic activity. Nevertheless, the pace of recovery will be uneven across economic sectors,” said the governor.

Going forward, she said Malaysia is well positioned to continue benefitting from stronger global economic and trade activities.

“While the growth outlook continues to be shaped by developments surrounding the pandemic, the implementation of containment measures, which are mainly aimed at curbing social activities and allow almost all economic sectors to operate, would minimise the impact on economic activity.”

The country’s current account of the balance of payments registered a surplus of RM12.3 billion or 3.3% of GDP.

As for headline inflation, it turned positive in the first quarter of the year and is expected to average about 2.5% to 4% for the year. – Bernama, May 11, 2021.