Malaysia’s economic contraction quickened again in the fourth quarter, as a fresh virus wave late last year helped drive the economy to its worst annual showing since the Asian financial crisis.
GDP shrank 3.4 percent in the quarter from a year earlier, its third straight contraction and a deeper decline than the minus-3.1 percent figure analysts surveyed by Bloomberg were expecting.
The fourth-quarter figure compares with the third quarter’s revised 2.6 percent year-on-year contraction.
Photo: Reuters
The economy contracted 5.6 percent for all of last year, its worst performance since 1998 and below the government’s projection of minus-3.5 percent to minus-5.5 percent.
The data are “an undoubtedly downbeat print to end the year of 2020 on a challenging note,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp (華僑銀行) in Singapore. With difficulties continuing into the early part of this year, “the market would inadvertently see today’s GDP data as one big signal that Bank Negara Malaysia may have to ease in March rather than wait for any more ‘confirmatory’ data.”
Malaysian central bank Governor Nor Shamsiah Mohd Yunus said yesterday that monetary policy remains appropriate and accommodative after the bank cut its policy rate by 125 basis points last year to fight the recession. Still, the central bank has room to provide further support to the economy if needed, she added.
Malaysian stocks fluctuated after the data, with the benchmark index gaining 0.2 percent at the close at 12:30pm. The market was only open for a half-day Thursday ahead of the Lunar New Year holiday. The ringgit was unchanged at 4.0445 against the US dollar.
The worst may be over — at least for now — as Malaysia allowed the retail sector to resume operations on Wednesday, following a month-long lockdown that’s estimated to have cost the economy 700 million ringgit (US$173 million) a day.
The government said it would gradually reopen the economy even as the country remains under a state of emergency, seeking a balance that will protect lives while ensuring that economic activity continues.
PANDEMIC
The loosened restrictions came into effect after health officials estimated daily virus cases peaked at the end of last month. The nation added 2,764 new cases on Tuesday — the smallest number since Jan. 11 — and Malaysian Director-General of Health Noor Hisham Abdullah said infections may show a downward trend by the time the lockdown is slated to end on Feb. 18. The tally rose to 3,288 cases on Wednesday.
The government last month unveiled a 15 billion ringgit package to help the economy weather the impact from the recent surge in COVID-19 cases. The plan, which includes cash support to the poor, tax breaks and wage subsidies, will be funded through a reallocation of existing funds and not via fresh spending.
However, this year is off to a slow start with most of the country under lockdown.
The governor declined to give a fresh estimate for this year’s GDP — which the central bank previously forecast at 6.5 percent-7.5 percent growth — saying it will be addressed next month.
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