PETALING JAYA: Malaysia’s gross domestic product (GDP) contracted 17.1% in the second quarter of 2020, the worst in history, impacted by the nationwide movement control order (MCO) to contain the Covid-19 pandemic.
Malaysia’s GDP had contracted 11.2% in the fourth quarter of 1998 during the global financial crisis.
Q1’20 saw a marginal growth of 0.7%.
Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus said the MCO included various measures that restricted production and consumption activities. This resulted in demand and supply shocks that emanated not only from significantly weak external demand conditions, but also production constraints in many economic sectors.
Additionally, there was a marked decline in tourism activity due to international border closures and restricted interstate travel. On the supply side, most economic sectors registered negative growth, while most expenditure components declined. On a quarter-on-quarter seasonally-adjusted basis, the economy contracted by 16.5%.
Based on monthly GDP estimates, the sharp decline in the economy was observed in April 2020 whereby GDP contracted 28.6%, while the performance in May improved to -19.5% and continued to further improve in June by registering a small contraction of -3.2%.
During the quarter, headline inflation was at -2.6%, mainly due to substantially lower retail fuel prices compared to last year and the tiered electricity tariff rebate. Core inflation moderated slightly to 1.2%.