(Bloomberg) -- Malaysia’s economy contracted by the most since the Asian financial crisis more than two decades ago as it bore the full brunt of pandemic lockdowns in the second quarter.
Gross domestic product shrank 17.1% compared to a year earlier, its worst showing since the fourth quarter of 1998, the central bank said Friday. That compared to the median forecast of a 10.9% contraction in a Bloomberg survey of economists.
The central bank downgraded its full-year GDP forecast for this year to -3.5% to -5.5%. Previously it had predicted growth in a range of 0.5% to -2%.
Key Insights
- Exports in the trade-reliant economy fell sharply in the second quarter amid disruptions to global supply chains, declining 21.7% from a year ago, the data showed. Consumer spending plunged because of the lockdown, falling 18.5% in the period
- The economy shrank 16.5% compared to the previous three months, worse than economists’ estimate of an 11.4% contraction. It was the second quarterly contraction in a row, the technical definition of a recession
- The economy began to show signs of recovery at the tail end of the quarter. Manufacturing production and sales growth turned positive in June and the unemployment rate fell to 4.9%
- Governor Nor Shamsiah Mohd Yunus said in a briefing Friday she’s “cautiously optimistic that the worst is behind us.” The full-year forecast was cut because the pandemic had a bigger impact on global demand than previously assumed and Malaysia’s lockdown was extended
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- Services industries contracted 16.2% from a year ago, manufacturing declined 18.3% and construction plunged 44.5%
- The government is seeking to raise its debt limit for the first time since 2009 to fund the fiscal stimulus
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