KUALA LUMPUR — Malaysia’s economy shrank a worse-than-expected 6.2% in the first quarter from a year earlier because of a steep fall in exports and manufacturing, data released Wednesday showed.
Central bank Gov. Zeti Akhtar Aziz said economic conditions remain tough, and the economy is likely to register a similar performance in the current quarter.
The first-quarter contraction is the country’s first in nearly eight years and the worst since the fourth quarter of 1998 when GDP fell 11.2% from the previous year. It was more severe than the median 4% forecast by 18 economists polled by Dow Jones Newswires, and reverses the 0.1% growth eked out in the fourth quarter of 2008.
“We are now going into the third month of the second quarter; from what we have seen, export demand continues to be weak and economic conditions are still challenging despite early signs of an improvement,” Ms. Zeti said. Second-quarter gross domestic product “will be similar to the first quarter.”
Economic conditions, however, are expected to improve in the second half of 2009, supported by the government’s fiscal-stimulus measures and Bank Negara Malaysia’s efforts to increase financing for the private sector, Ms. Zeti said.
“Though Malaysia’s first-quarter GDP was worse than expected, it is not out of line with patterns in the region,” said David Cohen, an economist at Action Economics in Singapore.
For 2009, the current GDP forecast is a range of between a 1% contraction and a 1% expansion, but Second Finance Minister Ahmad Husni Hanadzlah said Tuesday that it “will definitely be below minus 1%.”
Prime Minister Najib Razak will announce a revision to the full-year GDP forecast on Thursday. Economists polled by Dow Jones Newswires predict a median contraction of 1.6% for 2009.