Malaysia’s economy contracted 3.4 per cent in the fourth quarter of 2020 (4Q20) with the resurgence in COVID-19 infections, bringing the year’s full reading, which was marked by lockdowns and border closures globally, to -5.6 per cent.
The manufacturing sector was a major contributor in the fourth quarter, while services, plantation and mining shrank.
Department of Statistics Malaysia chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the country last recorded a contraction in 2009 at -1.5 per cent and 2020’s contraction was the worst since the 7.4 per cent decline in 1998 during the Asian Financial Crisis.
“The slower growth in the quarter was driven mainly by tighter movement restrictions, as well as commodity supplies disruption but offset by continued growth in external demand,” he said in conjunction with the release of the Q4 Gross Domestic Product (GDP), which was held virtually on Thursday.
The economic growth for 2020 was slightly lower than BNM’s earlier forecast of between -3.5 per cent and -5.5 per cent.
Malaysia recorded 0.7 per cent growth in the first quarter of 2020 before descending to a broad contraction of -17.1 per cent in the second quarter and narrowed to -2.7 per cent in the third quarter.
For the quarter-on-quarter seasonally adjusted was recorded at negative growth of 0.3 per cent in 4Q20 compared to 18.2 per cent in the third quarter of 2020.
On a monthly basis, the GDP improved to -1.7 per cent in December as movement restrictions on the inter-district and inter-state travel in October and November were lifted.
In 2020, various movement control order phases were implemented in the country from March 18, 2020 until now to curb COVID-19.
“Thus, the performance of economic activities following the domestic supply and demand factors and the influence of the external sector has led the Malaysian economy to record negative growth for the three consecutive quarters for year 2020,” said Mohd Uzir.
He added that Malaysia’s 4Q20 GDP growth contracted 3.4 per cent, influenced by the decline in all economic sectors except for the manufacturing sector, which registered a positive growth of 3.0 per cent in the quarter.
Meanwhile, the services sector, which was a major contributor to economic activity, declined 4.9 per cent in 4Q20 from -4.0 per cent in the third quarter, due to the contraction of sub-sectors for the tourism-related industries following travel restrictions.
“Among the severely affected sectors were food and beverages and accommodation, as well as the transportation and storage segments which posted a double-igit decline,” said Mohd Uzir.
Malaysia’s current account balance continued to register a surplus by recording RM19.0 billion in the final quarter of 2020, led by higher net export of goods at 12.4 per cent due to higher external demand as exports recorded a better growth as compared to imports.
This has indirectly led to a trade surplus of RM184.8 billion in Malaysia’s economy for 2020 with a total trade of almost RM2 trillion, said Mohd Uzir.
Malaysia’s private final consumption expenditure with a contribution of 58.0 per cent to GDP decreased 3.4 per cent in the fourth quarter of 2020 compared to -2.1 per cent in the third quarter, attributed to the decline of restaurants and hotels. — BERNAMA