By Adrian Lim
KUALA LUMPUR, Aug 14: The Malaysian economy contracted by 17.1 per cent in the second quarter (2Q2020) of 2020 against a growth rate of 0.7 per cent in the first quarter of 2020 (1Q2020).
Bank Negara Malaysia (Bank Negara) in a press statement today said the lacklustre economic performance in 2Q2020 was severely impacted by the stringent containment measures to control the Covid-19 pandemic globally and domestically.
In Malaysia, the central bank said the nationwide Movement Control Order (MCO) which includes various measures that restricted production and consumption activities has weighed down the economic growth.
As a result, it asserted that the MCO has caused demand and supply shocks that emanated not only from significantly weak external demand but also production constraints in many economic sectors.
It added that there was a significant decline in tourism activity due to international border closures and restricted interstate travel.
“On the supply side, most economic sectors registered negative growth, while most expenditure components declined.
On a quarter-on-quarter seasonally adjusted basis, the economy contracted by 16.5 per cent,” the central bank said.
Nonetheless, Bank Negara expects the Malaysian economy to recover gradually in the second half of 2020 as the economy progressively reopens and external demand improves.
The central bank believed the positive outlook is supported by the rebound of key indicators such as wholesale and retail trade, industrial production, gross exports and electricity generation.
“This improvement in growth will also be supported by the recovery in global growth and continued domestic policy support.
“In particular, consumption and investment activity is projected to benefit from the wide range of measures in the fiscal stimulus packages, continued financial measures and low interest environment.
“With the reopening of economic activities, a concurrent improvement in labour market conditions is expected.
“Overall, the Malaysian economy is forecasted to grow within the range of -3.5 per cent to -5.5 per cent in 2020, before staging a rebound within a growth range of 5.5 per cent to 8.0 per cent in 2021,” it said. —DayakDaily