KUALA LUMPUR (May 13): Bank Negara Malaysia (BNM) said Malaysia's economic growth, as measured by gross domestic product (GDP), moderated sharply to 0.7% in the first quarter of 2020 (1Q20) due to the impact of measures taken both globally and domestically to contain the spread of the Covid-19 pandemic.
In a statement today, BNM said the GDP growth moderation 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 came to a sharp downshift with the implementation of the MCO on March 18, 2020. Movement restrictions including international and domestic travel restrictions, limited work and operating hours and mandatory social distancing significantly curtailed economic activity. Production was only permitted for essential goods and services and the industries integral to their supply chains. Labour-intensive and consumer-oriented sectors were also impacted.
"The Malaysia 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 expenditure, external demand and investments declined, while private consumption growth moderated. On a quarter-on-quarter seasonally-adjusted basis, the economy contracted by 2.0%,” BNM said.
Looking ahead, BNM said the Covid-19 pandemic would significantly impact the global and Malaysian economic outlook for 2020 as strict measures to contain the spread of the pandemic will weigh considerably on both external demand and domestic growth.
"The Malaysian economy is expected to contract in the second quarter. This reflects the longer duration of containment measures both globally and domestically. As these containment measures are eased and the domestic MCO is lifted, economic activity is expected to gradually improve in 2H20.
"The sizeable fiscal, monetary and financial measures and progress in transport-related public infrastructure projects will provide further support to growth in 2H20. In line with the projected improvement in global growth, the Malaysian economy is expected to register a positive recovery in 2021,” BNM said.
Malaysia’s 1Q20 on-year GDP growth at 0.7% is the weakest since 3Q09 when the economy contracted 1.2%.
According to BNM’s statement on Nov 20, 2009, the Malaysian economy registered an improvement in 3Q09 with a reduced contraction of 1.2% (2Q09: -3.9%) amid positive growth in domestic demand and stabilisation of external demand.