The Malaysian economy contracted 17.1 per cent year on year in the second quarter (Q2), the worst slump since the fourth quarter of 1998, official data showed Friday.
Malaysian Central Bank, Bank Negara, said in a statement that the decline reflected the unprecedented impact of the stringent containment measures to control the COVID-19 pandemic globally and domestically, reports Xinhua.
The central bank has revised its official gross domestic product (GDP) growth forecast for 2020 to between -3.5 per cent and -5.5 per cent, from previously projected growth of between -2 per cent and 0.5 per cent.
According to the central bank, the nationwide Movement Control Order (MCO) which included various measures that restricted production and consumption activities, 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.
According to Malaysian Statistics Department, Malaysia's services and manufacturing sectors recorded a negative growth of 16.2 per cent and 18.3 per cent respectively, in the second quarter.
Construction as well as mining and quarrying also plummeted 44.5 per cent and 20 per cent, respectively.
Meanwhile, Malaysia's exports fell 21.7 per cent.
On a quarter-on-quarter seasonally-adjusted basis, the country's economy contracted by 16.5 per cent.
The central bank expected the Malaysian economy to recover gradually in the second half of the year as the economy progressively re-opens and external demand improves.
"Overall, the Malaysian economy is therefore forecasted to grow within the range of -3.5 per cent to -5.5 pe rcent in 2020, before staging a rebound within a growth range of 5.5 per cent to 8 per cent in 2021," said the central bank.
It highlighted the country's economic activity has resumed since the economy began to reopen in early May 2020."Consequently, the growth is expected to have troughed in the second quarter, with a gradual recovery in the second half," said the bank.
The growth outlook is also underpinned by the rebound of key indicators such as wholesale and retail trade, industrial production, gross exports, and electricity generation.
"This improvement in growth will also be supported by the recovery in global growth and continued domestic policy support," it added.
Capital Economics said in a note Friday that Malaysian economy contracted by much more than it had expected.