Malaysian economy shrinks most in more than two decades hinh anh 1A corner of Kuala Lumpur, capital of Malaysia (Source: internet)

Kuala Lumpur (VNA) -
Malaysia’s economy has contracted the most since the Asian financial crisis more than two decades ago, due to impacts of global trade crisis and tough measures taken to prevent the spread of the COVID-19.

According data released by the country’s central bank on August 14, Malaysia’s gross domestic product shrank 17.1 percent in the second quarter compared to a year earlier, its worst showing since the fourth quarter of 1998. That compared to the median forecast of a 10.9 percent contraction in a Bloomberg survey.

The restrictions, which included businesses being shut down and people confined to their homes, “resulted in demand and supply shocks,” with border control measures globally hitting tourism arrivals, the central bank added.

Wan Suhaimi Saidi, an economist at Kenanga Investment Bank, warned that the trade-dependent economy was “heading into a recession since there is no sign of a full recovery in demand and business activity.”

He said he expects a full-year contraction of between 4 percent and 6 percent, more than the central bank’s estimate of 3.5-5.5 percent.

However, Nor Shamsiah Mohamad Yunus, head of the central Bank Negara Malaysia, said the economy was poised for a recovery in the current quarter as virus-related restrictions are eased.

“We are likely to see a trough in the second quarter. The economy is poised for a recovery in the second half and rebound further in 2021,” he said at a virtual news conference. “I am cautiously optimistic the worst is behind us.”

Bank Negara said the second-quarter decline “reflected the unprecedented impact of the stringent containment measures to control the Covid-19 pandemic globally and domestically” imposed from mid-March to early June.

The country has so far recorded over 9,000 COVID-19 cases, including 125 deaths./.