Chief statistician confirms worst reported figure since 1998 financial crisis.
Malaysia’s gross domestic product (GDP) contracted by 5.6 percent in 2020 compared to a 4.3 percent growth of 2019, reported Chief Statistician of Malaysia, Mohd Uzir Mahidin.
The negative growth was the first annual contraction since the economy shrank by 1.5 percent in 2009 and is the worst reported figure since the -7.4 percent in 1998 at the height of the Asian financial crisis.
The report released by the Department of Statistics also confirmed that Malaysia’s GDP had contracted 3.4 percent in the fourth quarter of 2020 year-on-year compared to a decline of 2.6 percent in the preceding quarter.
“In 2020, various movement control order (MCO) phases were implemented in the country since March 18, 2020, until now to curb the outbreak of Covid-19.
“Thus, the performance of economic activities following the domestic supply and demand factors, and the influence of external sectors, has led the Malaysian economy to record negative growth for three consecutive quarters for the year 2020,” said Mohd Uzir.
The Perikatan Nasional government of Prime Minister Muhyiddin Yassin assumed office in March 2020 following the collapse of the elected Pakatan Harapan government and immediately found itself having to cope with both the Covid-19 pandemic and its economic fallout.
Mohd Uzir pointed out that Malaysia experienced negative growth for five consecutive quarters before recording positive growth during the 1998 Asia Economic Crisis.
“In terms of Malaysia’s monthly GDP performance, the Malaysian economy recorded a contraction of 4.7 percent in October, declining slower in November (-4.0 percent) and December (-1.7 percent).
“Malaysia’s GDP for the fourth quarter of 2020 was influenced by the decline in all economic sectors except for the manufacturing sector, which registered positive growth, said Mohd Uzir.
He said that the services sector, a major contributor to economic activity, declined 4.9 percent in this quarter.
“The decrease in the services sector was due to the contraction of sub-sectors for the tourism-related industries following travel restrictions which contributed to the lower foreign tourists arrival to Malaysia as well as movement restriction of domestic tourists in the country, he said.
Mohd Urzir added that among the worst affected sub-sectors were the food and beverages, accommodation, transportation and storage segments.
“The implications of the Covid-19 pandemic have further contributed to the increase of the unemployment rate 4.8 per cent in the fourth quarter of 2020,” he said.
Mohd Uzir said the number of underemployed persons also increased as compared to 2019, and this scenario affects disposable income which indicates a slowdown and indirectly led to a decrease of the Gross National Income (GNI) per capita from RM45,212 (2019) to RM42,531 in 2020.