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Malaysia economy shrank faster, 3.1% in Q4 on lockdown measures

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Malaysia economy

Based on a Reuters poll showed on Tuesday (Feb 9), Malaysia economy seems to shrink in the fourth quarter. It is due to sustained restrictions on the public’s movement and business to prevent the spread of COVID-19.

12 economists have a median estimate that the economy shrank 3.1% in the October-December quarter from a year ago. In addition, this is followed by 2.7% contraction in the third quarter.

Economic recovery was most likely to have “virtually interrupted” in the final quarter of last year. This is because sustained movement control order (MCO) to curb the spread of coronavirus hit consumption, said in a research note by Capital Economics.

Senior Asia economist for Capital Economics, Gareth Leather said that the bad news is that worse is yet to come. He added that the government’s decision to impose lockdown again will weigh heavily on economic activity this quarter. Originally, he expected that the economy will decrease by 4% in the current quarter from year-ago levels.

Malaysia economy statistical data

In 2020, the government forecasted that the economy will fall by 4.5%.

Furthermore, Malaysia has gone through the first economic contraction in the second quarter of last year. The economy shrank by 17.1% due to a six-week lockdown to curb the outspread of COVID-19.

Last month, the government announced a lockdown as earlier movement control order failed to restrain a surge in coronavirus infections. It have reached a cumulative total of over 245,000 infected cases with 896 deaths as of Monday.

In 2020, Malaysia’s exports decreased by 1.4% from a year earlier as economic activity interrupted due to the COVID-19 pandemic. The shipments only began to recover in the last four months of the year.

The government has predicted a growth of 6.5% to 7.5% this year.

 

Government has permitted more leeway for businesses to reoperate under the current lockdown. However, according to a regional economist for Barclays, Brian Tan, it remains unlikely that Malaysia can foresee the economy to return on the track of recovery in the first quarter of this year.

Tan had also forecasted 2021 full-year growth at 4.0%. Besides, after the tightening of MCO, it is unlikely to pick up economic activity in Q1 21.

 

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Malaysia’s economy shrank at faster 3.1% pace in Q4 on lockdown measures: Poll

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