Economy shrank by 8.3pct during first half of 2020

 

The economy shrank by 8.3 percent during the first half of this year compared with the same period last year, according to the Department of Statistics (DOSM).

According to the department's Malaysian Economic Statistic Review Vol 5/2020, there are signs of recovery since July.

The industrial production index (IPI, a measure of real output) had registered 1.2 percent growth in July after four consecutive months of negative growth.

Negative growth in the wholesale and retail sector was also easing. This, coupled with better commodity productions and higher exports were also positive indicators, said the DOSM.

A key recommendation by the DOSM was to stimulate local consumption to reduce reliance on external demand, particularly in the tourism sector, which has been badly hit by the Covid-19 outbreak.

DOSM said that the tourism industry contributed 15.9 percent of the nation's economy in 2019.

The department noted that the government has been aiding the tourism industry by offering financing and individual tax relief of up to RM1,000 for domestic tourism expenditure.

Construction, which contributed less than 5 percent to the economy, was another sector which the DOSM believed should receive a boost.

"This sector has a high backward linkage and multiplier effect and has the ability to stimulate other sectors that lead to economic growth.

"Thus, increasing the related activities and expanding the opportunity of this sector that will push forward the momentum of the economy," said the DOSM.

On the downside, the DOSM noted that unemployment has not returned to pre-pandemic levels and expects wages to continue to be suppressed.

"Businesses in selected industries have reported reducing monthly working hours of their employees amidst the challenging economic climate, resulting in lower salaries paid; while others have to implement pay cuts as an option to sustain business operations.

"It is foreseen that this will decrease the average and total salaries and wages paid to the employees, hence affecting decent work conditions," said the DOSM. - Mkini