Signs of a better economy is evident in the recently released Bank Negara Q3 economic report, according to BNM Malaysia’s economy posted a smaller contraction of 2.7 per cent in the third quarter which surpasses consensus estimate of -4.6 per cent.
Not only that the other indicator, the Gross Domestic Product which contracted 17.1 per cent in 2Q made a turnaround with 2.7 percent contraction in Q3 this was supported by improvements in all sectors, continuous normalisation of economic activities and higher demand from key trading partners.
As per the report although the economy is in a technical recession, it has shown signs of recovery as the manufacturing industry rebounded by 3.3 per cent in 3Q as compared with a decline of 18.3 per cent in 2Q due to strong electrical and electronics (E&E) production activities.
Bank Negara Malaysia Governor Datuk Nor Shamsiah Mohd Yunus said recovery in export performance was driven by E&E exports given the strong demand of work-from-home equipment and medical equipment, resulting in current account on the balance of payment registering a higher surplus of RM56.1 billion or 7.1 per cent of GDP during the quarter under review.
“However, the outlook is still subject to downside risk, whereby the resurgence of COVID-19 cases could impact the global growth, although the risk to economic growth due to the resurgence in cases is not expected to be as severe as observed in the 2Q,” she said during the virtual 3Q GDP press conference today.
On the domestic front, Nor Shamsiah said the containment measures in affected states could post some challenges to economic growth and activities.
On sectors, the services industry recorded a contraction of -4.0 per cent to the GDP against -16.2 per cent in 2Q, while the mining sector registered -6.8 per cent in 3Q from -20.0 per cent in 2Q. For agriculture, it posted -0.7 per cent in 3Q compared with a 1.0 per cent growth in 2Q.
The BNM chief also noted that the construction sector recorded -12.4 per cent in 3Q against -44.5 per cent in 2Q, however, the relaxation of construction activities and ongoing infrastructure projects would provide support for growth going forward.