Malaysia’s GDP suffers sharpest contraction since 1998 due to COVID-19

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Malaysia’s economy last year contracted at its fastest pace in more than two decades, as the coronavirus shuttered businesses and hammered the country’s key exports, data showed Thursday.

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Full-year gross domestic product shrank 5.6 percent, the statistics department said, marking the worst performance since a 7.4-percent drop in 1998 during the Asian financial crisis.

In the fourth quarter, GDP slipped 3.4 percent year-on-year, worse than had been forecast as a virus resurgence forced authorities to reimpose measures to curb its spread.

The Southeast Asian nation initially kept the virus in check by quickly imposing a lockdown last year that closed most businesses for weeks, but it was hit hard by a second wave once restrictions were eased.

Net exports fell 12.3 percent in 2020, official data showed. Malaysia’s economy is underpinned by exports of commodities including oil and gas, and palm oil as well as manufactured goods such as electronics.

The manufacturing sector shrank 2.6 percent, the agricultural sector declined 2.2 percent, and construction shrank by a fifth.

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Despite the dismal figures, there was evidence that an upturn “in the manufacturing and commodity sectors has taken root”, Yeah Kim Leng, economics professor at Sunway University Business School, told AFP.

But he warned that “the pandemic resurgence and accompanying containment measures will likely dampen the economic recovery in the first half of this year”.

The International Monetary Fund has warned global GDP will be about $22 trillion smaller than previously expected between 2020 and 2025 because of the virus crisis.

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