KUALA LUMPUR - Malaysia's gross domestic product (GDP) contracted 17.1 per cent year-on-year in the second quarter of 2020, compared to a marginal growth of 0.7 per cent in the first quarter, Bank Negara and the Department of Statistics announced on Friday (Aug 14).
This is the worst performance in nearly 22 years when the fourth quarter of 1998 saw an 11.2 per cent contraction, during the Asian financial crisis.
"The decline reflected the unprecedented impact of the stringent containment measures to control the Covid-19 pandemic globally and domestically," Bank Negara said in a statement.
In Malaysia, the nationwide Movement Control Order from March 18 included various measures that restricted production and consumption activities.
With the gradual reopening of the economy since May, the central bank expects GDP to improve, as the economy further eases, within the range of minus 3.5 per cent to minus 5.5 per cent in 2020, and 5.5 per cent to 8.0 per cent in 2021.
"The economy is poised for a recovery in the second half and will rebound further in 2021," Bank Negara governor Nor Shamsiah Mohd Yunus told a virtual news conference.
She added that data suggested that the economic fallout was at its worst in April, during the height of the coronavirus containment restrictions.
A sharp decline was seen in April where GDP contracted 28.6 per cent, while performance in May improved to negative 19.5 per cent and continued to further improve in June by registering a smaller contraction of 3.2 per cent.
On the production side, all sectors recorded a negative growth with the exception of the agriculture sector.
A significant decline in tourist arrivals amid international travel restrictions contributed to the contraction in the services sector, said Chief Statistician Mohd Uzir Mahidin.
The services and manufacturing sector recorded a negative 16.2 per cent and negative 18.3 per cent growth, respectively, while the construction sector plummeted 44.5 per cent.
Other indicators such as sales and vehicles registration declined sharply for April and May 2020.
Key drivers expected to boost the economy include the reopening of the domestic economy, stimulus measures, and large public transportation projects.
The unemployment rate, which increased in the second quarter to 5.1 per cent from 3.5 per cent in the first quarter, is also expected to improve in line with the recovery in economic activity.
"I am cautiously optimistic that the worst is behind us," said Datuk Nor Shamsiah.
Malaysia has recorded a total of 9,129 cases of Covid-19 and 125 deaths since the outbreak, with 15 new cases confirmed on Thursday.