KUALA LUMPUR- Malaysia’s economy plunged into its first contraction since the 2009 global financial crisis in the second quarter as the coronavirus pandemic ravaged business activity, prompting the central bank to sharply cut its GDP forecast for this year.
The central bank said gross domestic product shrank by 17.1 percent in April-June from the same period a year earlier – its worst slump in over 20 years and a much deeper contraction than the 10 percent decline forecast in a Reuters poll.
The downturn comes as the government imposed strict curbs on movement and businesses for most of the second quarter to contain the spread of the coronavirus which has infected more than 9,000 people in the Southeast Asian country.
It was Malaysia’s worst economic slump since the Asian financial crisis in 1998 and marked a sharp decline from the 0.7 percent year-on-year growth seen in the first quarter.
Economies have slumped throughout Southeast Asia due to the coronavirus fallout, with Singapore and Philippines both now in recession.
The central bank cut its GDP forecast for this year, expecting the economy to shrink by between 3.5 percent and 5.5 percent in 2020. It previously said the economy could contract as much as 2 percent this year in the worst case scenario.
The data showed a broad-based fall in economic activity, but there were signs of recovery in June especially in the manufacturing and agriculture sectors.
“The extent of GDP decline has improved quite significantly as the economy began to be reopened in May,” said Bank Islam chief economist Mohd Afzanizam Abdul Rashid, predicting a continued recovery.