Malaysia’s Q3 economy records smaller contraction of 2.7pc

KUALA LUMPUR (XINHUA) – Malaysia’s economy decreased at a slower pace of 2.7 per cent in the third quarter from the double-digit decline of 17.1 per cent in the second quarter of 2020, said its central bank on Friday.

Bank Negara Malaysia, the central bank, said in a statement that the improvement largely reflected the re-opening of economy from the COVID-19 containment measures and better external demand conditions.

The improvements in growth were seen across most economic sectors, particularly in the manufacturing sector, which turned positive following strong electrical and electronic (E&E) production activity, said the central bank.

According to the Malaysian Statistics Department, the manufacturing sector grew 3.3 per cent compared to a decline of 18.3 per cent in the previous quarter, supported by electrical, electronic and optical, vegetable and animal oils and fats, and food processing products.

The agriculture sector slightly dropped 0.7 per cent due to the decrease in fishing and rubber sub-sectors.

The services sector recorded a smaller drop of four per cent, an improvement from negative 16.2 per cent in the second quarter of 2020 due to the better performance in finance and insurance, as well as information and communications sub-sectors.

The construction sector fell 12.4 per cent due to the decline in all segments except for specialised construction activities.

Meanwhile, mining and quarrying sector registered a smaller decline of 6.8 per cent from negative 20 per cent in the previous quarter, mainly attributed by improvement in the production of natural gas and crude oil and condensate.

In the third quarter of 2020, exports of goods and services decreased at a slower pace of 4.7 per cent from a negative 21.7 per cent in the second quarter, mainly supported by a recovery in goods.

The central bank expected the Malaysian economy to improve further going into 2021 in tandem with better global demand and domestic policy support.

“The recent resurgence of COVID-19 cases and targetted containment measures could affect the momentum of the recovery in the final quarter of the year,” it said.

“However, as most economic sectors have been allowed to continue to operate subject to compliance with standard operating procedures, the impact is expected to be less severe compared to the containment measures during previous periods.”

Going into 2021, the central bank said the growth is expected to recover, benefitting from the improvement in global demand and a turnaround in public and private sector expenditure amid various policy support.