KUALA LUMPUR -- Malaysia's economy contracted 3.4% in the fourth quarter of 2020, resulting in a pandemic-driven decline of 5.6% for the full year, the central bank announced on Thursday.
The drop in October-December marked the third consecutive quarterly contraction and clarified the extent of COVID-19's impact on the Southeast Asian country. The result was worse than the median forecast of a 3.1% fall in Q4, predicted in a Reuters poll of 12 economists.
The full-year figure is Malaysia's weakest since a 7.4% contraction in 1998 during the Asian financial crisis. In 2019, Malaysia's GDP had expanded by 4.3%, growing 3.6% in the last quarter.
The economy plunged 17.1% in the second quarter of 2020 due to strict coronavirus countermeasures, before a 2.7% decline in the third quarter as the rules were eased. But a resurgence of the virus late in the year deepened the recession.
All economic sectors, except manufacturing, registered declines in the fourth quarter due to subdued private consumption and weaker public investment, the central bank said.
Gov. Nor Shamsiah Yunus expressed a degree of optimism for 2021 despite a new nationwide lockdown imposed in January to curb infections.
"We expect the Malaysian economy to recover in 2021 given the improvement in global demand, with the rollout of vaccines boosting consumer and business sentiments," she said.
"The imposition of the movement control order since January will weigh on growth," she conceded, but she said the effects would be "less severe" than the impact of the initial lockdown last year.
Still, there are significant concerns for the micro, small and midsize enterprises that underpin the economy. Unemployment has also jumped since the first restrictions kicked in last March.
As of November, the jobless rate stood at 4.8%, with 764,400 people out of work, according to the Department of Statistics.
"A special focus is needed on the labor market," Nor warned, "as unemployment has reached 4.8% in the fourth quarter and the bank expects the labor market to remain weak throughout the first half of 2021."