Covid-19 to affect first quarter economic growth, says BNM

BNM governor Nor Shamsiah Mohd Yunus says the outbreak will impact the tourism industry, including spending on hotels, retail transport and restaurants.

KUALA LUMPUR: Bank Negara Malaysia said the outbreak of the coronavirus, which has since come to be known as Covid-19, will affect the country’s gross domestic product (GDP) growth for the first quarter of 2020.

BNM governor Nor Shamsiah Mohd Yunus says the outbreak — which has claimed over 1,000 lives — will impact the tourism industry, including spending on hotels, retail transport and restaurants.

The virus, she said, would also impact, “to a smaller extent”, the manufacturing sector due to the closure of factories in China.

“The overall impact of the virus on the Malaysian economy, however, will depend on the duration and spread of the outbreak as well as policy responses by authorities,” she said at the fourth-quarter GDP briefing here.

Nor Shamsiah’s remarks on the outbreak’s impact on the tourism industry come on the heels of confirmation by the Malaysian Association of Tour and Travel Agents (Matta) yesterday that 95,000 hotel bookings had been cancelled due to Covid-19 and the travel ban imposed by China on its citizens.

When asked if she was worried about the impact of the outbreak on the economy at this juncture, Nor Shamsiah said the country had a diversified economy that would be able to cushion the impact of the virus for the other sectors, like construction and manufacturing.

“Exports will continue to grow. Yes, our tourism sector may be affected, but some parts of the manufacturing sector will enjoy higher growth, like the medical-related sector.”

Private consumption, Nor Shamsiah said, would continue to support growth.

Meanwhile, she said that the country’s economy grew by 4.3% last year. In 2018, it stood at 4.7%.

Nor Shamsiah said that the slight drop in the country’s economic growth was due to the disruptions in the commodities sector.For the fourth quarter of 2019, the economy grew by 3.6%, driven by higher private sector spending.

However, the percentage is the lowest since the third quarter of 2009.

“Had we not suffered the supply disruption, it would have been 4.3%.” - FMT