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KUALA LUMPUR (May 13): Bank Negara Malaysia (BNM) said Malaysia’s economic growth, measured by gross domestic product (GDP), sharply moderated to 0.7% in the first quarter of 2020 (1Q20) due to the impact of measures taken both globally and nationally to contain the spread of the Covid-19 pandemic.
In a statement today, BNM said that the moderation in GDP growth mainly reflected the implementation of the Movement Control Order (MCO) in Malaysia.
“After a steady expansion in the first two months of the quarter, economic activity declined dramatically with the implementation of the MCO on March 18, 2020. Movement restrictions including international and domestic travel, hours of work, and operating restrictions limited and compulsory social activities distancing significantly reduced economic activity Production was only allowed for essential goods and services and industries integral to their supply chains Labor intensive and consumer oriented sectors were also affected.
“The Malaysian economy moderated sharply to 0.7% in 1Q20 (4Q19: 3.6%). On the supply side, the services and manufacturing sectors moderated while the other sectors contracted. In terms of spending, the External demand and investments slowed, while private consumption growth moderated. On a seasonally adjusted quarter-over-quarter basis, the economy contracted 2.0%, “BNM said.
Looking ahead, BNM said the Covid-19 pandemic would significantly impact the global and Malaysian economic outlook for 2020, as stringent measures to contain the spread of the pandemic will weigh heavily on both external demand and internal growth.
“Malaysia’s economy is expected to contract in the second quarter. This reflects the longer duration of containment measures both globally and nationally. As these containment measures ease and the domestic MCO rises, it is expected that economic activity gradually improve in 2H20.
“Considerable fiscal, monetary and financial measures and progress in public transport related infrastructure projects will further support growth in 2H20. In line with the projected improvement in global growth, the Malaysian economy is expected post a positive recovery in 2021, “BNM said.
Malaysia’s 1Q20 annual GDP growth at 0.7% is the weakest since 3Q09 when the economy contracted 1.2%.
According to the BNM statement of November 20, 2009, the Malaysian economy recorded an improvement in 3Q09 with a reduced contraction of 1.2% (2Q09: -3.9%) amid positive growth in domestic demand and the stabilization of external demand.
