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BCN-06
MALAYSIA-ECONOMY-GDP
Malaysian records slowest growth since 2009 due to virus
KUALA LUMPUR, May 13, 2020 (BSS/AFP) – Malaysia’s economy grew at its
slowest pace in more than a decade during the first three months of the year
as the coronavirus pandemic battered the country, but still managed to beat
forecasts, data showed Wednesday.
Gross domestic product grew 0.7 percent on-year in January-March, the
central bank reported, compared with 3.6 percent growth in the previous
quarter.
It was the worst figure since the economy shrank in 2009 during the global
financial crisis, but strong domestic consumption provided support and helped
defy gloomy forecasts of a one percent contraction.
However analysts expect the full effects of the virus to be felt in the
second quarter, as Malaysia only went into lockdown to halt the spread of
COVID-19 in mid-March.
The curbs, which saw people ordered to stay home and most businesses to
close, have cost the economy at least 63 billion ringgit ($14.5 billion),
according to Prime Minister Muhyiddin Yassin.
Restrictions were eased at the start of May as Malaysia’s relatively minor
outbreak slowed, although some will remain in place until at least next month.
“The data surprised on the upside in the end,” said Wellian Wiranto, OCBC
Bank economist.
“It appears that we had all underestimated the strength of the consumers to
power on, come what may.”
Authorities have sought to bolster the economy, with the central bank
slashing interest rates and the government rolling out massive stimulus
packages.
Tourism and trade have been hard hit, with demand for Malaysia’s key
exports such as oil and rubber falling, while the collapse in oil prices has
also taken a toll.
In addition, political uncertainty has added to risks for investors — the
democratically-elected government collapsed earlier this year and was replaced
by an administration that includes a scandal-hit party ejected from office in
2018.
Given the unpredictable domestic and global outlook, analysts are not
ruling out further rate cuts.
Wiranto said the central bank would “not be hesitant to cut rates further”
if there were signs the economy was struggling despite the easing of virus
curbs.
BSS/AFP/MMA/1555HRS