( Kuala Lumpur, 14th August 2020 ) According to official data, China’s economy in the second quarter from April to June shrank by 17.1% year-on-year, setting a record for the worst in more than 21 years since the fourth quarter of 1998 during the financial turmoil, much higher than the market. The expected 10% indicates that the actions taken to avoid the spread of the coronavirus epidemic have severe impact on the control order.
Statistics Malaysia announced that in the second quarter of the gross domestic product (GDP) output mix, only agriculture maintained growth, while the rest declined. Among them, the construction industry fell the most, reaching 44.5%, and the mining industry also plummeted by 20%. Simultaneously. Bank Negara revised down its economic forecast for this year, and it is expected to shrink by 3.5 to 5.5% throughout the year and rebound by 5.5% to 8% next year.
The manufacturing and service industries, which accounted for a significant proportion, also fell 18.3% and 16.2% respectively.
In terms of demand in the second quarter, only public spending increased slightly by 2.3%, while other combinations fell. Among them, private consumption and fixed capital fell by 18.5% and 28.9%, respectively, while exports and imports also fell by 21.7% and 19.7%.
According to a median forecast survey conducted by Reuters to 11 economists, the economy may fall by 10% in the second quarter from the same period last year. This is mainly due to the coronavirus disease epidemic and strict containment measures that have dragged down private spending and exports. Individual economists forecast a contraction between 5.6 and 13.6%.
Economic activities may be severely hit by the government's strict movement control orders and business. According to HSBC, most of the second quarter was spent on curbing the spread of the virus.
According to the HSBC report, “private consumption and fixed investment both shrank in this quarter, as shown by high-frequency indicators such as auto sales, retail, consumer confidence, and industrial production.”
Analysts say that unless there is a second wave of virus cases, the worst of the economy may be over, but the global infection rate is rising again and the duration is prolonged, and the lack of travel funds may slow the pace of recovery.
The National Bank said in April that the economy may contract by 2% or slightly increase by 0.5% this year. So far this year, Bank Negara has lowered the overnight policy rate (OPR) four times in a row, bringing it to a record low of 1.75%.
**Info & Image are taken online
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