Malaysia’s latest economic data offers hope but Covid-19 curbs could threaten recovery
- Q3 GDP contracted 2.7 per cent from the same period in 2019, less severe than the 3.2 per cent forecast
- Experts warned that a sustained rebound in 2021 will require ongoing containment of the coronavirus
Malaysia’s economy contracted less than expected in the third quarter, shrinking 2.7 per cent from the same period last year, leading Malaysia’s central bank to offer a more positive outlook for growth next year.
The decline was less severe than the 3.2 per cent forecast, which the central bank attributed to the success of Covid-19 containment measures and the gradual reopening of the economy. The decline in domestic demand also slowed and net exports rebounded.
Bank Negara Malaysia said on a quarterly basis, the economy expanded 18.2 per cent in the third quarter compared to a sharp drop of 16.5 per cent in the second quarter.
That was when a nationawide lockdown stalled Malaysia’s economy and caused it to shrink 17.1 per cent from the same period the previous year, the first year-on-year downturn since the 2009 financial crisis.
Yeah Kim Leng, an economist at Sunway University, welcomed the improved third-quarter figures.
“This augurs well for Malaysia’s economic recovery from Covid-19’s economic impact but the concern has now shifted to the final quarter where the conditional movement control order on selected areas – including the populous Klang Valley – is anticipated to have a dampening effect,” he said.
“We may see a slight deterioration in the fourth quarter instead of edging to positive territory.”
Bank Negara Malaysia governor Nor Shamsiah Yunus attributed improved growth to external demand, federal stimulus measures to address inequality and unemployment, and the lockdown being eased.