UPDATE 1-Malaysia’s GDP shrinks 4.5% in Q3, recovery seen as pandemic’s impact fades

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KUALA LUMPUR, Nov 11 (Businesshala) – Malaysia’s economy shrank 4.5% in the third quarter, losing its second-quarter buoyancy, data released on Friday showed, but the central bank expected a quick recovery as coronavirus restrictions eased. Relaxation was given and economic activities resumed.

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The contraction was markedly worse than the average forecast for a 1.3% contraction from a Businesshala survey of economists.

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Bank Negara Malaysia said that although recent indicators suggested more positive momentum, growth would pick up in the fourth quarter and next year.

Nor Shamsia Mohamed Yunus, Governor of Bank Negara Malaysia, said at a news conference, “The growth outlook is subject to COVID-19 risk factors globally and domestically, stability in global financial markets and gradual easing of supply chain disruptions.” Is.”

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Bank Negara said Malaysia’s economy had recovered from the pandemic-induced recession in the second quarter, but a rise in COVID-19 cases and curbs on movement have impacted consumption and investment activity.

The central bank here in August lowered the country’s growth outlook for 2021 to 3%-4%.

However, coronavirus infection rates have dropped significantly in recent weeks amid a rapid vaccination schedule, raising hopes for change. More than three-quarters of Malaysia’s 32 million population has been fully vaccinated.

Malaysia now expects growth next year to be between 5.5% and 6.5% as more regions reopen and as commodity prices improve and external demand improves.

Since last year, the government has introduced 530 billion ringgit ($127.66 billion) in stimulus packages, while the BNM slashed its policy rate by 125 points to help the economy cope with the fallout of the pandemic.

BNM said its monetary policy stance would continue to be determined by new data and information, and it was “conscious of premature withdrawal of policy support.”

Nor did Shamsia insist that Malaysia was not facing any deadlock and that price pressure would remain moderate in 2022. Headline inflation slowed to 2.2% in the third quarter, from 4.1% in the second.

“(We) will continue to closely monitor for signs of a more robust correction in a price volatility environment,” Nor Shamsia said.

“The bank is also alert to the creation of financial imbalances.”

$1 = 4.1515 ringgit reporting by Latif daily; Editing by Simon Cameron-Moore

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