.JPG "A general view of Port Klang ahead of the conditional movement control order in Klang October 8, 2020. u00e2u20acu201d Picture by Miera Zulyana")
KUALA LUMPUR, Dec 17 — The World Bank reported that Malaysia’s economy continued to decline during the third quarter of this year, posting a growth of -2.6 per cent.
However, it pointed out that this contraction was at a much lower rate than three months before, when it experienced a -17.1 per cent growth.
In its Malaysia Economic Monitor report titled “Sowing the Seeds”, the World Bank attributed the increase in economic activity to the easing of pandemic-related movement restrictions following the transition to the recovery movement control order (RMCO).
“The improvement in economic activity was broad-based across all sectors, led by the manufacturing sector which recorded a positive growth of 3.3 per cent during the quarter.
“Services, construction and mining sectors recorded smaller declines as movement restrictions were relaxed.
“The agriculture sector posted a small decline of 0.7 per cent, following slower growth of fishing, forestry and logging, rubber and the oil palm segments, which offset the gains recorded in the aquaculture and livestock segments,” it said.
Previously, during the months of April to June (second quarter), the World Bank reported that the manufacturing sector had experienced a contraction of -18.3 per cent.
During the same period, other sectors had reportedly declined between -44 per cent and -16.2 per cent, with the only exception being the agriculture sector, which showed growth by 1 per cent.
The World Bank also highlighted that after the implementation of the RMCO, both internal and external demand rose in the third quarter.
“Private consumption recovered to a considerable degree, with a much smaller contraction of 2.1 per cent during quarter three of 2020 from -18.5 per cent in quarter two.
“Various income support measures such as the Bantuan Prihatin Nasional cash transfers, wage subsidies and the i-Lestari Employees Provident Fund withdrawals boosted household spending during the quarter,” it said.
Meanwhile, growth in public consumption rose from 2.3 per cent in the second quarter to 6.9 per cent in the third — due to higher spending in supplies and services, and in emoluments.
The World Bank said Malaysia’s exports improved over the third quarter largely due to a rise in external demand.
“Gross exports expanded at the rate of 4.4 per cent, with the increase in the exports of manufactured and agriculture goods driving this recovery,” it said.
Previously, during quarter two, the World Bank reported that gross exports saw a decline of 15.1 per cent.
“The increase in manufactured exports was due to a rebound in electrical and electronic (E&E) exports, especially to major trading partners such as China and the US; by firms fulfilling a large backlog of orders; and by an increase in the demand for work-from-home appliances, servers and medical devices.
“The conclusion of the Regional Comprehensive Economic Partnership (RCEP) negotiations in November 2020, which will lead to the formation of the world’s largest preferential trade area, is expected to be supportive of Malaysia’s exports in the years ahead,” it said.
According to the World Bank, the Malaysian economy is currently going through its worst recession in 20 years.
After the first wave of the Covid-19 outbreak in the country in February, the government imposed the movement control order (MCO) to stem the spread of the coronavirus.
The triple shock of the direct health impact of the pandemic; the economic impact of restrictions on movement; and the impact of a synchronised global recession left Malaysia’s economy in tatters, although it is slowly picking itself back up now.
