GDP nosedives in Q2 due to economic pause in April

Malaysia's gross domestic product for the second quarter (Q2) is down negative 17.1 percent compared to the same period last year.

This is the first time quarterly gross domestic product (GDP) change is in the negative territory since Q3 2009 (-1.1 percent).

"On a quarter-on-quarter seasonally-adjusted basis, the economy contracted by 16.5 percent," said Bank Negara in a statement.

According to Reuters, this the worst slump since the Asia financial crisis which saw GDP shrink by 11.2 percent in Q4 of 1998.

Putrajaya had enforced strict movement controls between March 18 and May 3, limiting economic activity in a bid to slow down the spread of Covid-19.

According to the Department of Statistics, all components of the economy except agriculture (+ 1.0 percent) registered negative growth.

The hardest hit was construction (-44.5 percent) followed by mining (-20 percent), manufacturing (-18.3 percent) and services (-16.2 percent).

Private consumption fell by 18.5 percent while government expenditure grew by 2.3 percent.

The current account balance was still in surplus at RM7.6 billion, down from RM9.5 billion during the previous quarter.

Bank Negara said that the poor Q2 performance was due to curbs on movements which restricted production and consumption activities as well as demand and supply shocks globally.

Meanwhile, monthly GDP estimates may have indicated that Malaysia's economic slump may have bottomed out in April.

According to Malaysia's chief statistician, Mohd Uzir Mahidin, GDP contracted by 28.6 percent in April before improving to -3.2 percent in June.

Bank Negara governor Nor Shamsiah Mohd Yunus, according to Bernama, explained that Malaysia was able to reopen the economy much faster than expected, minimising permanent dislocation of the economy. - Mkini