Zafrul: GDP growth 'clearly' rebounds after April

Although gross domestic product (GDP) for the second quarter (Q2) was -17.1 percent compared to the same period last year, the data showed that the economy had rebounded after April, said Finance Minister Tengku Zafrul Abdul Aziz.

"It must be highlighted that a deeper analysis shows a clear improvement in GDP growth from April (-28.6 percent) to May (-19.5 percent) and then to June (-3.2 percent) (compared to the corresponding months last year).

"The GDP growth in June 2020 GDP clearly indicates that the economy has rebounded strongly in line with its re-opening and the implementation of the recovery movement control order (MCO)," he said in a statement today.

Malaysia's Q2 GDP performance is the worst in the Asean region so far, behind Philippines (-16.5 percent), Singapore (-13.2 percent), Indonesia (-5.3 percent) and Vietnam (+0.36 percent).

Zafrul said that the Q2 GDP contraction was expected because the MCO imposed from March until May 2020 had curtailed economic activity causing both supply- and demand-side disruptions.

He noted that Malaysia's movement control efforts were one of the strictest in the region.

Pointing to projections by the International Monetary Fund (IMF), Zafrul said 150 countries are expected to register GDP contractions this year and other countries, such as Singapore, are also experiencing double-digit negative growth.

"Similarly, developed countries such as the United Kingdom (-21.7 percent), France (-13.8 percent), Italy (-12.4 percent) and the United States (-9.5 percent) also suffered sharp contractions for Q2 2020 as reported by OECD (the Organisation for Economic Co-operation and Development countries)," he said.

Malaysia, he said, had reacted quickly to the crisis with a slew of stimulus packages such as the Prihatin, Prihatin SME and Penjana packages.

Zafrul said there are clear indications that Malaysia was on its way to economic recovery, noting that exports, retail trade, industrial production and consumer spending had all performed well.

"In fact, passenger car sales recorded a 6.1 percent year-on-year improvement in June 2020. Measures such as tax incentives for car purchases clearly resulted in this increase, indicating positive developments in the sector

"Consumer spending has clearly improved, as evidenced by the sharp improvement in credit card spending to RM10.7 billion in June, as compared to RM6.5 billion in April 2020, with growth attributed to safe, contactless shopping," he said.

He said Malaysia's unemployment rate in June had also improved to 4.9 percent from a record high of 5.3 percent in May.

"Prihatin and Penjana measures, which saved over 2.8 million jobs under the wage subsidy and employment retention programmes, have indeed contributed to the improved unemployment rate," he claimed.

He assured that Putrajaya would continue to support the rakyat and businesses to enable as many economic sectors to rebound when global growth improves in 2021. - Mkini