According to Bank Negara Governor Datuk Nor Shamsiah Mohd Yunos, the sharp decline was due to measures taken to curb the COVID-19 pandemic.
“The Movement Control Order (MCO) order has an impact on growth. After we saw economic growth in the first two months, economic activity fell sharply following the implementation of the MCO on March 18, 2020.
“International and domestic travel restrictions, limited working hours and compulsory social distancing had affected the economy.
“Withdrawal is only allowed for basic goods and services,” Shamsiah said at an online press conference here today.
Shamsiah said the position of the Malaysian economy was in line with most of the world’s economies which also implemented movement control measures.
Inflation for the first quarter was at 0.9 per cent, with the balance of sales and service tax (SST) being impacted.
Meanwhile, the ringgit declined by 4.9 percent against the US dollar in the first quarter following the outflow of non-resident portfolio worth RM26.2 billion.
“Although many steps have been taken by most countries, investor sentiment is still affected by the weakness of global projection,” she said.
Shamsiah also said Bank Negara predicted economic growth is expected to recover by the second half of 2020.
“When the control measures are liberalized, economic activity is expected to gradually improve by the second half of 2020,” she said.
She added that it would be supported by the accelerated fiscal, monetary and global growth measures leading to major recovery by 2021.