Malaysia’s 4Q GDP contracts 3.4%, full-year 5.6%

Photo by Shahrin Yahya/The Edge

Photo by Shahrin Yahya/The Edge

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KUALA LUMPUR (Feb 11): Malaysia’s gross domestic product (GDP) shrank further in the fourth quarter of 2020 (4Q20), registering a contraction of 3.4% compared to a decline of 2.7% in 3Q20, as the recovery of the economy was impacted by the tightening of movement restrictions.

This brings full-year GDP performance in 2020 to a contraction of 5.6%, the biggest decline since 7.4% in 1998. The contraction is more severe than the Ministry of Finance’s projection of 3.5% to 5.5% for 2020. 

For comparison, Malaysia’s GDP contracted 17.1% in 2Q20, while it grew 0.7% in 1Q20. On a year-to-year basis, Malaysia’s GDP grew 4.3% in 2019.

Chief Statistician of Malaysia Datuk Seri Dr Mohd Uzir Mahidin, who spoke during Bank Negara Malaysia’s 4Q20 GDP virtual briefing today, said on a month-to-month basis, the GDP declined 4.7% in October, 4% in November and later improved with a growth of 1.7% in December.

The drop in private consumption accelerated to 3.4% in the fourth quarter compared to a decline of 2.1% in 3Q20 as a result of lower household expenditure amid tighter movement restrictions, said Mohd Uzir.

The increase in public consumption also moderated in 4Q20 with slower growth of 2.7% in 4Q20, compared to 6.9% in 3Q20 on the back of moderated government spending.

Investment in the private sector contracted at a slower pace of 7% compared to 9.3% a quarter ago, while public investments declined further at 19.8% compared to a drop of 18.6% in 3Q20, due to lower capital spending by both government and public corporates, said Mohd Uzir.

Meanwhile, Malaysia’s net exports grew at a slower pace of 12.4% in 4Q20 compared to a higher growth of 21.9% in 3Q20 due to higher demand for manufactured exports while imports improved at a faster pace, Mohd Uzir added.

On the supply side, most economic sectors continued to contract, except for the manufacturing sector, which posed a slower growth of 3% compared to 3.3% a quarter ago.

The mining and construction sectors both posted a double-digit decline of 10.6% and 13.9% respectively in 4Q20, compared to 6.8% and 12.4% in 3Q20.

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Kathy Fong