Malaysia posts economic contraction in Q3, BNM sees quick recovery

Malaysia’s economy recorded a higher-than-expected 4.5% contraction in the third quarter. However, the Bank Negara Malaysia (BNM) expects a quick recovery following the lifting of some COVID-19 pandemic restrictions that allowed economic activity resumption.

The latest economic data failed to meet analysts’ expectations of only 1.3% year-on-year drop.

The BNM, with its optimistic outlook, said the economy would expand 5.5%-6.5% in 2022. Stronger market labor and external demand were seen as major growth contributors.

However, BNM Governor Nor Shamsiah Mohd Yunus noted that the expansion was still subject to global and domestic COVID-19 risk concerns, global financial market stability, and the slow alleviation of supply chain disruptions.

The governor added that economic growth in China and the United States, Malaysia’s biggest trading partners, would also drive the country’s recovery. Higher commodity prices and strong demand for semiconductors were also expected to help.

Malaysia’s coronavirus infection rates have dropped dramatically in recent weeks as a result of an increased vaccine campaign. More than three-quarters of the country’s 32 million population are fully vaccinated.