The Malaysian Department of Statistics released the Gross Domestic Product (GDP) for the third quarter of 2021, which presents the overall performance of Malaysia’s economy.
Malaysia’s GDP in the third quarter of 2021 showed a decrease of 4.5 per cent while the quarter-on-quarter seasonally adjusted GDP contracted 3.6 per cent (Q2 2021: -1.9%). Correspondingly, the nation monthly economic performance
gradually improved from a contraction of 7.6 per cent in July to a decline of 4.7 per cent in August and further improved to negative 1.1 per cent in September 2021. Approaching year end, Malaysia’s economy grew 3.0 per cent for the sum of three quarters of 2021 (3Qs 2020: -6.4%). Nevertheless, Finance and Insurance sub-sector grew moderately at 4.4 per cent (Q2 2021: 23.3%) contributed by the finance segment, while the insurance segment remains on a favourable growth. Information and communication sub-sector expanded to 6.2 per cent against 5.9 per cent in the second quarter of 2021, supported by a better performance in the telecommunication segment. On a quarter-on-quarter seasonally adjusted, the overall Services sector declined 3.1 per cent (Q2 2021: -3.2%)”.
Chief Statistician Malaysia, Dr. Mohd Uzir Mahidin, said that, “In terms of sectoral performance, the Services sector which was the main contributor to the Malaysia’s economy contracted 4.9 per cent in the third quarter of 2021 as compared to a positive growth of 13.5 per cent in the preceding quarter. This performance was attributed to the Private services sub-sector, which recorded a fall of 6.8 per cent (Q2 2021: 15.2%) due to Wholesale & retail trade with double-digit decline of 11.7 per cent (Q2 2021: 21.0%) followed by Business services (-15.8%) and Food & beverages and accommodation (-16.5%) sub-sectors.
The Manufacturing sector posted a marginal decline of 0.8 per cent (Q2 2021: 26.6%) in the third quarter of 2021. On a quarter-on-quarter seasonally adjusted, this sector fell 1.8 per cent. The decline of Manufacturing sector was affected by the Transport equipment, other manufacturing and repair (-29.6%) and Non-metallic mineral products, basic metal & fabricated metal products (-14.0%). However, Petroleum, chemical, rubber & plastic products (12.6%) and Electrical, electronic & optical products (7.1%) grew at a slower pace in line with the moderate growth in exports of goods recorded in this quarter.
The Agriculture sector continued to decrease 1.9 per cent (Q2 2021: -1.5%) in this quarter. Meanwhile, this sector decline 1.4 per cent on a seasonally adjusted terms. The downturn of Agriculture sector was influenced by the Oil palm and Aquaculture
sub-sectors which declined at 11.1 per cent and 4.0 per cent, respectively. The decrease of Oil palm sub-sector was due to the lower production in fresh fruit bunches despite higher price in crude palm oil. Nonetheless, Other agriculture and Livestocks sub-sectors remained positive growth.
The Mining & quarrying sector decreased 3.6 per cent (Q2 2021: 13.9%) in this quarter influenced by Crude oil & condensate sub-sector which declined 8.0 per cent (Q2 2021: 4.9%). Meanwhile, the Natural gas sub-sector showed a slower growth of 2.1 per cent (Q2 2021: 21.9%). In terms of seasonally adjusted, this sector registered a decrease of 7.2 per cent.
The Construction sector contracted 20.6 per cent as compared to an increase of 40.3 per cent in the preceding quarter. Nevertheless, Construction sector declined 13.5 per cent on a seasonally adjusted terms. The decline in this sector was mainly influenced by the fall in Civil engineering (-36.1%), Residential buildings (-27.3%) as well as Non-residential buildings (-13.3%). On the contrary, Specialised construction activities continued to record a positive growth of 8.9 per cent (Q2 2021: 58.1%) albeit a moderation from the previous quarter.
He added, “Private final consumption expenditure which contributed 61.0 per cent to GDP in the third quarter of 2021, declined 4.2 per cent (Q2 2021: 11.7%) attributed to the lower consumption in Transport; Restaurants & hotels and Clothing & footwear. The doubledigit decline for consumption of Transport was attributed to the lower purchase of motor vehicles by households in this quarter compared to the same period of last year. Moreover, the decrease in Restaurants & hotels during this quarter was in line with strict movement restrictions as compared to the same quarter of the previous year. On a
seasonally adjusted quarter-on-quarter terms, the overall performance of Private final consumption expenditure posted an increase of 3.9 per cent”.
Gross fixed capital formation (GFCF) or investment on fixed assets declined 10.8 per cent (Q2 2021: 16.5%) in this quarter. The decrease of GFCF was influenced by the double-digit decline in Structure. However, Machinery & equipment (10.2%) and Other assets (8.3%) remained a positive performance. On a quarter-on-quarter seasonal adjusted performance, the GFCF registered a decrease of 5.8 per cent.
Government final consumption expenditure rose to 8.1 per cent (Q2 2021: 9.0%) supported by higher spending on supplies and services attributed to the health-related expenditure in this quarter. The high consumption on health services was reflected by the government efforts to reach the target of fully vaccinated of the adult population to achieve herd immunity in Malaysia. On a quarter-on-quarter seasonally adjusted, Government final consumption expenditure increased 5.2 per cent (Q2 2021: -1.1%). He also mentioned that “The Imports has expanded to 11.7 per cent (Q2 2021: 37.6%) compared to Exports which grew 5.1 per cent (Q2 2021: 37.4%) in the third quarter 2021. This has resulted the Net exports contracted 37.5 per cent from a growth of 34.3 per cent in the preceding quarter”.
In sum, the Chief Statistician stated, the nation foresee a better production growth following the increase of imported raw materials and continuous positive growth in investment of Machinery & equipment that led to a healthier perspective for future potential economic momentum. Higher commodity prices which translated to a positive growth of 2.3 per cent of GDP in nominal terms will increase income per capita and encourage household consumption. Furthermore, the ease of movement restrictions will revitalise the economy including tourism related industry in near terms.