Malaysian economic growth hits 10-year low as coronavirus fears loom
- Growth slowed to 3.6 per cent in final three months of 2019, the lowest since the height of the global financial crisis
- First quarter of 2020 also likely to disappoint, as Bank Negara governor warns of impact of the Covid-19 virus outbreak
The country’s central bank reported today that annual gross domestic product (GDP) growth fell to 4.3 per cent in 2019, the lowest in a decade.
Bank Negara also reported that for the final three months of 2019 growth had slowed to 3.6 per cent, the lowest since late 2009 at the height of the global financial crisis.
Meanwhile, Bank Negara governor Nor Shamsiah Mohd Yunus said growth for the first quarter of 2020 would be hit by the Covid-19 virus outbreak.
“The overall impact of the virus on the Malaysian economy will depend on the duration and spread of the outbreak as well as policy responses by authorities,” said Nor Shamsiah.
Growth, she said, had been hit by supply disruptions to the commodity sector – including lower output of palm and crude oil – but annual growth remained within the bank’s target.
The regulator said the move would address risks to growth, including “uncertainty from various trade negotiations, geopolitical risks, weaker-than-expected growth of major trade partners, heightened volatility in financial markets, and domestic factors that include weakness in commodity related sectors and delays in the implementation of projects”.
However, there remains room for further rate cuts this year.
“If the Covid-19 epidemic persists, another cut cannot be ruled out to shore up domestic demand although the above trend private consumption growth suggests the need may not be so urgent compared to a fiscal policy response,” said economist Yeah Kim Leng of Sunway University.
Meanwhile, Member of Parliament Wong Chen, who chairs the Investment and Trade Committee of the People’s Justice Party – the largest component party of the ruling Pakatan Harapan coalition – called on the Minister of Economic Affairs Azmin Ali to “explain his next steps”.
The Pakatan Harapan administration, which will have been in power for two years this May, has been accused of not doing enough to safeguard the economy, with the Barisan Nasional opposition coalition – which governed the country for over six decades before losing power in May 2018 – saying things were better under its rule.
Najib has maintained his government was far more adept at managing the economy, pointing at slumping investor confidence since it lost power.
The Pakatan Harapan government has said it was left with a debt of more than a trillion ringgit, which it blames on Najib’s alleged profligacy and corruption.
