KUALA LUMPUR, 11 February, 2021 (TON): Central Bank of Malaysia said in a statement on Thursday that the country’s GDP contracted 3.4 percent year on year in the fourth quarter of the previous year that rendered 5.6 percent drop for 2020.

The bank said, it is the biggest decline in the last 23 years.

The bank said that the negative growth in Q4 was largely attributable to the imposition of the Conditional Movement Control Order (CMCO) on a number of states since October 2020.

"The restrictions on mobility, especially on inter-district and inter-state travel, weighed on economic activity during the fourth quarter," it said, despite the fact that continued improvement in external demand provided support to growth.

Except for manufacturing, all economic sectors continued to record negative growth. On the expenditure side, moderating private consumption and public investment activities weighed on domestic demand.

"On a quarter-on-quarter seasonally-adjusted basis, the economy registered a decline of 0.3 percent," said the bank.

The central bank said while the near-term growth in 2021 will be affected by the re-introduction of stricter containment measures in January.

The growth trajectory is projected to improve from the second quarter onwards, it added.

The central bank said that the improvement will be driven by the recovery in global demand, where the International Monetary Fund (IMF) has revised upwards its 2021 global growth forecast by 0.3 percentage points to 5.5 percent.

It is expected that a turnaround by the public and private sector expenditures amid support from the policy measures, a greater rate of production from the manufacturing and mining sector will pave the way for growth.