KUALA LUMPUR: Malaysia’s economy, measured by gross domestic product (GDP), expanded 4.3 per cent last year from 4.7 per cent registered in 2018, Bank Negara Malaysia said.
This was the slowest pace in a decade, Bank Negara said, attributing it to lower output of palm oil, crude oil and natural gas, and a fall in exports amid the US-China trade war.
Bank Negara governor Datuk Nor Shamsiah Mohd Yunus said the 4.3 per cent was the lowest since the global financial crisis in 2009.
Shamsiah said the coronavirus outbreak was expected to affect Malaysia’s economy in the first-quarter (Q1) of 2020.
The effects would largely be felt in tourism and manufacturing sectors due to air travel ban and factories closure in China.
“As the situation is still evolving, the magnitude of the impact will depend on the duration and prolong of the outbreak as well as the respective governments’ policies responses to mitigate the impact,” she said at a press conference on the GDP numbers here today.
Shamsiah said Malaysia’s diversified economy may be able to cushion the outbreak impact on certain sectors.
“The growth of the local economy is expected to remain supported by the private sector spending and improving trade activities in 2020. However, there are downside risks that for this year’s growth for both global and domestic environment,” she added.
Shamsiah said the local economy would still being supported by stable private sector spending, stronger private consumption and more private investments this year.
“As of now, the effect of the coronavirus is very difficult for anyone to predict on how long it will last and when it can be contained. The impact it has on the economy would also be dependent on the respective economies’ stimuli.
“Next month, we will be in a better position to share with greater certainty on the impact in Q1 and for the rest of 2020,” she added.
Shamsiah said there was a number of pandemics the world had experienced in the past such as SARS, Ebola and MERS.
“What we have seen in the past, there could be a dip in growth but there will also be a sharp rebound in thereafter, depending on how the virus can be contained.”
The economy had grown 5.9 per cent and 5.1 per cent during the SARS outbreak in 2003 and MERS in 2015 respectively, she added.
Elaborating on the 4.3 per cent expansion, Shamsiah said it was fuelled by resilient private sector spending and continued expansion in the services and manufacturing sectors, despite the challenging external environment.
“However, the growth was affected by supply disruptions in the commodity-related sector and contraction in public investment activity,” she added.
For the fourth-quarter (Q4) of 2019, the local economy slowed to 3.6 per cent from 4.4 per cent recorded a year ago.
Shamsiah said the domestic economy was also affected by supply disruptions in the commodities sector, dragged by sharp decline in oil palm production, natural gas and crude oil contraction during the quarter.
“The economy was still growing driven by higher private sector spending (7.4 per cent) and private consumption (8.1 per cent) as well as private investment growth (4.2 per cent) in registered in Q4 last year.”
She said the growth would have been higher without commodity disruptions for the quarter at 4.3 per cent and 4.7 per cent for the full year.
She said headline inflation averaged lower during the quarter, mainly reflecting the lapse in the impact from sales and services tax (SST) implementation.
Core inflation, excluding the impact of consumption tax policy changes, was stable at 1.4 per cent.