Malaysia’s economy grew by 4.3% in 2019, down from 4.7% the previous year, the central bank said in a statement on Wednesday (Feb 12).
The domestic economy was affected by supply disruptions in the commodities sector during the fourth quarter, said Bank Negara Malaysia.
The services and manufacturing sectors remained the economy’s key drivers, and overall growth was supported by resilient private sector activities despite a challenging external environment, said the regulator.
Exports were hit, with negative growth year-on-year seen through all four quarters, from -1.1% to -0.4% to -1.9% to -3.3%.
Imports also contracted, starting out at -2.6% for the first quarter of 2019 to -4% in the fourth quarter.
In the financial sector, financing expanded by 4.7% on an annual basis, supported by sustained growth in outstanding loans, said BNM.
“Growth in outstanding business loans improved, while outstanding household loans grew at a stable pace,” said the central bank.
Islamic financing grew by 8.3% in 2019, down from 11% in 2018. This was the lowest growth in the last five years.
2020 HIT BY CORONAVIRUS
This year, growth will be affected by the coronavirus outbreak particularly in the first quarter of 2020, said the central bank.
The overall impact of the virus, or COVID-19, on the Malaysian economy will depend on the duration and spread of the outbreak as well as policy responses by authorities, said Bank Negara Malaysia.
“For the year as a whole, growth will be supported by household spending, the realisation of approved private investment projects in recent periods, and higher public sector capital spending,” said the regulator.
Downside risks to growth include uncertainties in external conditions such as the ongoing COVID-19 outbreak that started in China in January.
BNM pointed out that Malaysia’s economy will be affected by lower numbers of foreign tourists and spending on hotels, retail, transport and restaurants, as well as slower demand, and production disruptions in China affecting Malaysia’s exports.
In response to the outbreak of the COVID-19, several Malaysian banks have announced moratorium and temporary relief on financial commitments, including giving affected borrowers grace periods during which they do not need to repay their debts.
Hospital admissions and treatments for the virus of insurance and takaful policyholders will be covered by life insurance and takaful operators, said BNM.
Domestic factors affecting growth include weakness in the commodities sector and delays in project implementation, said BNM.
“Thus, two-way capital flows and exchange rate volatility should be expected.”
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