KUALA LUMPUR (REUTERS) - Malaysia's economic slump is expected to have deepened in the fourth quarter due to sustained restrictions on movement and business to curb the spread of the coronavirus, a Reuters poll showed on Tuesday (Feb 9).

The median estimate of 12 economists pointed to the economy shrinking 3.1 per cent in the October-December quarter from a year ago, following on from the 2.7 per cent contraction in the third quarter.

Economic recovery was likely to have "virtually stalled" in the final quarter of last year as sustained movement restrictions to clamp down on the spread of Covid-19 hit consumption, even as exports improved, Capital Economics said in a research note.

"The bad news is that worse is still to come," said Gareth Leather, senior Asia economist for Capital Economics.

"A surge in new cases of the virus and the government's decision to put the country back into lockdown will weigh heavily on economic activity this quarter," said Leather, who expects the economy to contract by 4 per cent in current quarter from year ago levels.

The government had forecast the economy to fall by 4.5 per cent in 2020.

Malaysia suffered its first economic contraction in over a decade in the second quarter of last year, when it shrank by 17.1 per cent due to an initial six week lockdown to curb the spread of the coronavirus.

Last month, the government imposed a lockdown as earlier movement curbs failed to arrest a surge in coronavirus infections, which have reached a cumulative total of over 245,000 cases including 896 deaths as of Monday.

Malaysia's 2020 exports fell 1.4 per cent from a year earlier as economic activity slowed due to the Covid-19 pandemic, though shipments began recovering in the last four months of the year.

While the government has allowed more leeway for businesses to stay open under the current lockdown, it remains unlikely that Malaysia can expect the economy to get back on the track of recovery in the first quarter of this year, according to Brian Tan, regional economist for Barclays.

"The likelihood of a pick-up in economic activity in Q1 21 appears to be fading after the tightening of social distancing measures," said Tan, who forecast 2021 full year growth at 4.0 per cent.

The government had forecast growth of 6.5 per cent to 7.5 per cent this year.