Malaysia’s GDP contracted 17.1% to 289.6 billion ringgit in the three months to June 30 compared to the same quarter last year, the lowest recorded since the fourth quarter of 1998 during the Asian Financial Crisis.
The Department of Statistics Malaysia said on Friday (August 14) that on the production side, all sectors recorded negative growth except agriculture that saw a slight rise of 1%. Agriculture contributed 8.5% to GDP.
On the demand side, all sectors recorded falls except for government final consumption expenditure that saw a growth of 2.3%.
April was the worst month when GDP contracted by 28.6%. The economy improved in May with a slower contraction of 19.5% and the line kept going up through June that finished the quarter on negative 3.2%.
Bank Negara Malaysia, the central bank, said the decline reflected the “unprecedented impact” of the strict COVID-19 pandemic restrictions domestically and globally.
“In Malaysia, the nationwide Movement Control Order (MCO) included various measures that restricted production and consumption activities. This resulted in demand and supply shocks that emanated not only from significantly weak external demand conditions, but also production constraints in many economic sectors,” BNM said in a statement.
The substantial decline in tourism also contributed to the second-quarter result.
From the first to the second quarter, the economy contracted 16.5%, reflecting the strict lockdown period that started March 18 and ended June 9.
The shock to the economy on both the demand and production sides hit businesses, that chalked up a 3.9% increase in outstanding loans in the second quarter, from 3.4% in the first quarter.
The central bank expects the economy to gradually recover in the second half of 2020.
“This outlook is underpinned by the rebound of key indicators such as wholesale and retail trade, industrial production, gross exports, and electricity generation,” said BNM.
Malaysia’s economy is also looking to the recovery in global growth.
BNM forecasts overall growth for 2020 to be within the range of -3.5% to -5.5% before rebounding to positive 5.5% to 8% in 2021.
Malaysia’s neighbours have also been reporting second-quarter contractions. Singapore reported a slump of -13.2%, its deepest cut on record, and Indonesia -5.32%. Similar to Malaysia, agriculture was one of Indonesia’s three growth sectors in the second quarter. The other two were infocomms and water supply.
© SalaamGateway.com 2020 All Rights Reserved