KUALA LUMPUR – The country’s economy recorded a contraction of 0.5% in the first quarter of 2021, a sign of recovery as Bank Negara Malaysia (BNM) maintained its 2021 gross domestic product (GDP) growth forecast.
The 0.5% contraction for the first three months of this year followed from a decrease of 3.4% in the preceding quarter with improvement seen in all economic sectors.
At the onset of the pandemic in the first quarter of 2020, Malaysia’s GDP grew 0.7%.
Manufacturing grew the most of all sectors, BNM Governor Datuk Nor Shamsiah Mohd Yunus said today.
The sector grew stronger at 6.6% in the first quarter 2021 compared to 3.0% in the fourth quarter of 2020, while services decreased 2.3% during the quarter, but it is better than the decline of 4.8% in the fourth quarter of 2020.
Agriculture grew marginally to 0.4%, mining and quarrying improved to negative 5.0% and construction decreased 0.4%.
Despite the third round of the movement control order (MCO 3.0), Shamsiah said Malaysia’s GDP growth is likely to remain in the 6.0% to 7.5% range in 2021.
“MCO 3.0 will be similar to MCO2.0 with most economic sectors remaining open,” she told a virtual press conference here, today.
Despite the recent reimposition of containment measures, she said the impact on growth is expected to be less severe than that experienced in 2020, as almost all economic sectors are allowed to operate.
“Overall, the growth recovery will benefit from better global demand, increased public and private sector expenditure as well as continued policy support. This will also be reflected in the recovery in labour market conditions, especially in the gradual improvement in hiring activity.
“Higher production from existing and new manufacturing facilities, particularly in the E&E and primary-related sub-sectors, as well as oil and gas facilities will provide a further impetus to growth.
Shamsiah reiterated that the growth forecasts had already priced in the uncertainties of the pandemic.
“These uncertainties were reflected by the bank’s wide forecast range of 150 basis points.”
“The roll-out of the domestic Covid-19 vaccine programme will also lift sentiment and contribute towards recovery in economic activity. Nevertheless, the pace of recovery will be uneven across economic sectors,” said the governor.
Going forward, she said Malaysia is well positioned to continue benefiting from stronger global economic and trade activities.
“While growth outlook continues to be shaped by developments surrounding the pandemic, the implementation of containment measures which are mainly aimed at curbing social activities and allow almost all economic sectors to operate, would minimise the impact on economic activity.”
The country’s current account balance registered a surplus of RM12.3 billion or 3.3% of GDP.
As for headline inflation, it turned positive in the first quarter of the year and is expected to average 2.5% to 4.0% for the year. – Bernama, May 11, 2021
