KUALA LUMPUR: Malaysia's economy contracted by 4.5 per cent in the third quarter (Q3) of 2021, following a 16.1 per cent expansion in the second quarter (Q2).
During a joint briefing by Bank Negara Malaysia and the Department of Statistics Malaysia, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said on a quarter-on-quarter seasonally-adjusted basis, the economy registered a decline of 3.6 per cent compared to -1.9 per cent in Q2 of 2021.
He said the contraction was mainly attributable to the strict containment measures, particularly in July under Phase 1 of the National Recovery Plan (NRP).
Uzir said on the supply side, all economic sectors registered a contraction.
"The construction sector contracted the most due to operating capacity limits," he said during the briefing.
On the expenditure side, Bank Negara said domestic demand declined by 4.1 per cent (Q2 2021: +12.4 per cent), weighed down mainly by the contraction in private consumption and investment activities, while the continued increase in public sector consumption spending provided support to growth.
Governor Datuk Nor Shamsiah Mohd Yunus said the progressive lifting of containment measures and continued improvements in the labour market would be vital in supporting the recovery in the future.
Moving forward, Nor Shamsiah said the domestic economy is on track to expand by 3.0 per cent to 4.0 per cent, supported by the increase in economic activities as containment measures are progressively relaxed amid continued policy support.
"The various relaxations of restrictions for fully vaccinated individuals, including interstate travel, would also spur tourism-related activities. In addition, the strength in global demand will continue to support export growth," she said.
Nor Shamsiah added that going forward into 2022, Malaysia's growth trajectory is expected to improve given the resumption of economic activities, further improvement in the labour market, continued policy support and expansion in external demand.
"The progress and efficacy of vaccinations, compliance with Standard Operating Procedures (SOPs), as well as the ability to effectively contain outbreaks from any new Covid-19 variants of concern will be key to the expected recovery," she said.
Meanwhile, Nor Shamsiah said the ringgit depreciated by 0.8 per cent against the US dollar in Q3 2021.
"This largely reflected the broad strengthening of the US dollar following greater clarity from the US Federal Reserve that it would likely begin tapering its asset purchase programme towards the end of the year.
"Since October 1, the ringgit has appreciated by 0.9 per cent (as of November 9) against the US dollar, broadly in line with the trend in other regional currencies.
"An improved domestic outlook further supported the ringgit amid the economic reopening and higher commodity prices.
"Going forward, as uncertainties regarding global liquidity adjustments and developments surrounding the path of the pandemic remain, financial and foreign exchange markets are expected to be subject to periodic bouts of volatility," she said.