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Malaysia's Q2 GDP seen contracting sharply on strict coronavirus curbs

08/12/2020 | 05:14am

* For poll data click: reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=MYGDP%3DECI

* Q2 GDP growth seen at -10.0% y/y vs Q1's 0.7%

* Growth crimped by lockdown during quarter - HSBC

* Q2 GDP data due on Friday, Aug 14 at 0700 GMT

KUALA LUMPUR, Aug 12 (Reuters) - Malaysia's economy is expected to have contracted for the first time in over a decade in the second quarter, as the coronavirus pandemic and strict containment measures dragged on private spending and exports.

Gross domestic product (GDP) likely fell 10% in April-June from the same period a year earlier, according to the median forecast from a poll of 11 economists. That would mark the first contraction since the third quarter of 2009 during the global financial crisis.

Individual forecasts ranged from -5.6% to -13.6%.

Bank Negara Malaysia (BNM), the central bank, is scheduled to release the data on Friday.

Economic activity likely took a heavy hit from strict curbs on movement and businesses imposed by the government for most of the second quarter in a bid to contain the spread of the virus, according to HSBC.

"Both private consumption and fixed investment contracted during the quarter, as pointed out by high frequency indicators like motor vehicle sales, retail sales, consumer sentiment and industrial production," the bank said in a research note.

Exports grew 8.8% in June, the first expansion in four months, as more countries eased coronavirus measures and global demand slowly picked up. However, shipments had slumped 25.5% the previous month, Malaysia's worst performance in more than a decade.

Barring a second wave of virus cases, analysts say the worst may be over for the economy, but a resurgence of infections globally and the prolonged absence of tourism dollars could slow the pace of recovery.

BNM had said in April that the economy could either shrink by as much as 2% or grow marginally by 0.5% this year.

It has cut its key interest rate four times so far this year, bringing it to a record low of 1.75%. (Reporting by Joseph Sipalan; Editing by Kim Coghill)

© Thomson Reuters 2020
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