13 May 2020
Malaysia’s economy climbed modestly during the first quarter, ahead of previous forecasts.
The Southeast Asian country’s economy is expected to shrink during the June quarter however, as the coronavirus pandemic dents exports and domestic demand.
Gross domestic product edged 0.7% higher during the January-March period compared to the previous year, ahead of the 1.5% drop forecast in a Reuters poll. However, the data was still below the 3.6% growth rate recorded during the last three months of 2019.
According to Bank Negara Malaysia, the global health crisis had battered economic growth across major and regional areas, with strict lockdown measures put in place in order to limit the spread of the virus, resulting in muted activity and demand.
“The ongoing pandemic has created an unprecedented economic crisis,” central bank Governor Nor Shamsiah Mohd Yunus said during a virtual media conference.
The central bank expects the economy shrink further during this quarter, affected by limitations on movement and businesses, before picking up gradually in the second half of the year.
Southeast Asia’s third-largest economy imposed lockdown measures in mid-March, and have extended them till June 9 in order to limit virus contagion.
Tourism in Malaysia has plummeted, with a significant drop in demand for its commodities such as palm oil, crude oil and natural gas also hitting the economy.
Private consumption, which expanded by 6.7% year-on-year during the first quarter, boosted economic growth. However, the sector may face obstacles moving forward as BNM forecasts the pandemic will have substantial implications on the country’s job market.
During the three months to March unemployment hiked 3.5%, as a result of strict social distancing measures. This was slightly above the 3.2% recorded during the fourth quarter, the department of statistics data revealed.
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