Malaysia's economy contracted by 17.1 percent in the second quarter of this year, the lowest quarterly drop in over 20 years, due to the lockdown imposed to curb the coronavirus outbreak, the central bank said Friday.
"The decline reflected the unprecedented impact of the stringent containment measures to control the COVID-19 pandemic globally and domestically," Bank Negara said in a statement.
A technical recession is a certainty with Bank Negara revising downward its annual growth forecast for 2020 to between negative 3.5 and negative 5.5 percent.
Earlier in April, the bank had projected the annual gross domestic product growth to range from a negative 2 percent to a positive 0.5 percent.
"However, the outlook will continue to be significantly affected by uncertainties surrounding global oil and commodity prices as well as the evolving COVID-19 developments," the bank said.
The government began imposing a partial lockdown on March 18 before easing it on May 4 to allow most of the economic sector to resume operation.
Bank Negara Governor Nor Shamsiah Mohd Yunus, in a virtual press conference, said that the worst of the economic fallout was in April.
"Since then as COVID-19 cases declined and restrictions were eased, economic activities began expanding in May," she said, adding, "I am cautiously optimistic that the worst is behind us."
The second quarter GDP of negative 17.1 percent was the worst since the 11.2 percent contraction recorded in the fourth quarter of 1998, at the height of the Asian financial crisis.
All sectors were in the red during the April-June period.
Services contracted by 16.2 percent, manufacturing by 18.3 percent, mining by 20 percent and construction by 44.5 percent. Only the agriculture sector grew, by 1 percent.
During the first quarter of this year, GDP grew 0.7 percent.
Before the coronavirus outbreak, Malaysia had forecast its economy to grow by 4.8 percent this year. Last year, GDP hit 4.3 percent.
"With the reopening of economic activities, a concurrent improvement in labor market conditions is expected. Overall, the Malaysian economy is therefore forecasted to grow within the range of negative 3.5 percent to negative 5.5 percent in 2020, before staging a rebound within a growth range of 5.5 percent to 8.0 percent in 2021," Bank Negara said.